Low gas prices slow drilling activity
Drilling activity in Canada is down for the first time in four years because of low natural gas prices, according to the Petroleum Services Association of Canada.
PSAC yesterday revised its 2006 forecast, dropping it 7.5% from 25,290 to 23,410 wells drilled.
The second quarter showed a 34% drop from the original forecast, released in October, with shallow gas activity in areas of Alberta and Saskatchewan experiencing the biggest decline.
“This is the first decrease in annual well count year-over-year since 2002,” said PSAC president Roger Soucy, adding the number of wells drilled went from 18,200 in 2001 to 15,800 the following year.
“The main reason for the decrease in shallow gas wells is that the price of the commodity hovered between five and six dollars for the majority of the second quarter.”
The association is predicting gas prices for the year will average $6.25 per thousand cubic feet, a drop from October’s prediction of $8.60.
“We expect continued downward pressure on current gas prices until mid- to late November,” said Soucy.
