Canadian oil and gas drilling has begun to recover, but it remains well below expectations before the Covid-19 pandemic inflicted a near total halt on field activity.
As of this week the Canadian Association of Oilwell Drilling Contractors (CAODC) reported 42 rigs in action including 31 in Alberta, eight in British Columbia (BC) and three in Saskatchewan, more than double the June average of 18.
However, the improved total is still only one-third of the CAODC forecast last fall for a 3Q2020 average of 125.
The severe industry setback caused by public health emergency responses to the coronavirus was seen in the latest account of Canadian railway-borne oil exports to the United States, compiled by the Canada Energy Regulator (CER).
Canadian cross-border rail oil shipments plunged by 86% to an average of 58,048 b/d in June from 411,991 in February, the last month of high traffic before the pandemic infected North America.
Natural gas pricing has stood out as a bright spot in the Canadian industry, according to market records posted by the Petroleum Services Association of Canada (PSAC).
Still, gas only shines by comparison with distress during last summer, before a pipeline tariff reform firmed up the market for Alberta and BC production.
Canadian gas currently trades at around C$1.90-2.00/MMBtu ($1.42-1.50), more than four times higher than the hard times low hit a year ago at C40-50 cents.
With variations for quality and distance to refineries, Canadian oil continues to track U.S. prices.
Canadian light oil currently fetches US$37-38.50/bbl, down by about $15 from July 2019. The benchmark for heavy and bitumen grades, Western Canada Select, is US$31-32, down by $9.00-10.00 from a year ago.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 2577-9877 | ISSN © 2158-8023 |