Strong pricing for natural gas and the highest oil prices since 2014 are set to continue supporting the recovery in drilling activity in Canada, which is set to top the 2019 pre-COVID levels next year, the Canadian Association of Energy Contractors (CAOEC) said on Tuesday.
Next year, a total of 6,457 wells are expected to be drilled in Canada, which would be an increase of 1,363 from the 5,094 wells planned for drilling this year, the association representing Canada’s energy service contractors operating close to the wellhead said in its Q4 2021 and 2022 Drilling Forecast.
The number of total jobs expected is expected to stand at 34,925 next year, an increase of 7,280 jobs in the Canadian oil patch compared to 2021, CAOEC said.
Despite the fact that U.S. President Joe Biden revoked the presidential permit for the Keystone XL pipeline on his first day in office in January, effectively killing the project, encouraging news came in recent weeks with the completion of Enbridge’s Line 3 replacement project, the Canadian association said.
CAOEC admitted that in comparison to recent years, the expected increase of 1,363 wells and 12,268 operating days of drilling activity means 2022 “is only marginally stronger than 2019 drilling levels.”
Still, the industry association noted that “2021 was a year of optimism for the Canadian energy service sector.”
“After the historic lows we endured last year, 2021 served as a beacon of hope for our sector,” CAOEC President and CEO, Mark A. Scholz, said in a statement.
“The solid rebound on energy demand and subsequent energy shortages across Europe and Asia emphasize the necessity of increased export capacity,” he added, noting that the industry’s labor challenges would continue.
The biggest risk to CAOEC’s forecast is going to be labor constraints, Scholz told Bloomberg in an interview.
After years of lows, CAOEC members have struggled this year with crew constraints due to labor shortages, hampering the sector’s ability to meet growing demand, the association said in its forecast.
But overall, “A recovery is well underway in the industry, and the best is yet to come in Canada’s energy sector,” Scholz said.
By Tsvetana Paraskova for Oilprice.com