Canada’s upstream energy sector is on a path to “eclipse” 2000’sdrilling pace, and early indications are that this year will showcontinued strength in gas exploration and production — a goodsign that supply may be on the upswing, according to a report byCambridge Energy Research Associates.
CERA reported that a record 17,693 wells were released in 2000,breaking the previous record of 17,049 set in 1997. The number ofcompletions also was a record at 16,507, surpassing the 1997 recordof 16,193. A record 9,000-plus gas wells, of which 2,086 were newdiscoveries, dominated, said CERA.
“The number of exploratory wells drilled is a signpost to futuregas supply,” said George Eynon, CERA director of Oil and GasResources, Canada. “A shift to exploration must occur for supply toincrease significantly. Indications that a swing may be under waycan be seen in the 2,086 new discoveries in 2000,” but he said thatthe “percentage of exploration needs to increase.”
The report indicates that Canadian drillers completed 8,929 gaswells, with the final number “likely to be approximately 9,125,”which would be a 40% increase over the previous year and nearlydouble the level for any of the previous five years. “Gascompletions increased to between 55% and 60% of total wells for thepast “several years,” said the report, and more than 75% weredevelopment wells that will take advantage of “soaring gas pricesand new pipeline takeaway capacity.”
Eynon said that the high proportion of development wells hasbeen maintained for five years, which exemplifies the “shallow gastreadmill the producers are relentlessly working on,” which he saidalso was reflected in the decreased meters drilled per well.
Most development gas wells and a portion of the explorationwells are expected to be onstream this year, and these wells shouldprovide approximately 3.0 Bcf/d of new production, more than enoughto replace the 2.6 Bcf/d of supply expected to be lost toproduction decline, said the report. Gas supply from western Canadawill increase “at least 350 MMcf/d, and “perhaps as much as 700MMcf/d, most of which would go to export markets in the UnitedStates.”
CERA reported that drilling in the first few weeks of this yearhas been on the rise, and has set new record levels. Rigutilization is up almost 10%, with 608 rigs (97% of the availablefleet) active as of Jan. 30, which is 50 more rigs than at thistime in 2000. The Petroleum Services Association of Canada recentlyforecast 17,500 well completions for 2001, including more than10,250 gas well completions alone.
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