NEB notes shift to gas-directed drilling in recent years

Canada’s National Energy Board says the percentage share of rigs in western Canada targeting natural gas has been on the rise since 2012. By late 2014, the majority of rigs were drilling for gas instead of oil, and in January and February of 2015, the share had increased to 62%.

NEB cited three reasons for the gas rebound: increased targeting of tight gas containing natural gas liquids can earn more revenue for producers; evaluation of gas resources that would support proposed LNG export projects from Canada’s West Coast; and the decline in oil prices.

Gas drilling averaged 73% of all activity between 2000 and 2008, NEB said. Industry started shifting from gas to oil in 2008 because of the discovery of tight oil in various formations in the Western Canada Sedimentary Basin and because oil prices were high enough to justify development. The share of rigs targeting oil became the majority in 2011 and peaked at 62% in 2012.