Canada's industry forecasts a decline of about 10% in drilling this year after a strong performance in 1994.
A record for drilling was set at 12,200 wells in 1985.
The Canadian Association of Oilwell Drilling Contractors (Caodc) predicts about 10,900 oil and gas wells will be drilled this year. The association said rig utilization will average about 297 units, compared with an average of 312 rigs in 1994.
Don Herring, Caodc managing director, said smaller companies will drill fewer wells, but larger firms will be more active in the foothills deep gas region and there will be more horizontal drilling for oil.
Herring said the projected decline from 1994 is based on lower natural gas prices and less investor confidence in smaller companies. But he said the industry has had 2 good years in a row, and the outlook remains strong.
Caodc forecasts oil prices of $16-18 (U.S.)/bbl this year and average natural gas prices of $1.75/Mcf, excluding spot sales.
The Canadian Association of Petroleum Producers (CAPP) estimates 10,500 wells will be drilled in 1995. It forecasts contract prices of $1.85-1.90/Mcf, compared with an average $1.80 in 1994.
CAPP's agenda for 1995 includes a request for the Alberta government to reduce royalty rates, particularly on horizontal wells.
CAPP also will continue a campaign to spell out the industry's record on environmental issues. It will ask the Alberta government to take action on Special Places 2000, a policy to clearly define protected areas and areas in which exploration and development are allowed.
GAS PRODUCTION SHUT IN
Meantime, a number of Alberta producers are shutting in gas production because of weak prices on the spot market.
Home Oil Co. Ltd., Calgary, curtailed 20% of its 260 MMcfd in normal sales because netbacks are below acceptable levels. Half of the cut is going into storage and the remainder is shut in at the wellhead.
Discovery West Corp., Toronto, has shut in 35% of its production, or 11 MMcfd.
Norcen Energy Resources Ltd., Calgary, shut in about 5 MMcfd, or 1% of its 450 MMcfd production.
A number of companies said they are taking a close look at the market. Spot prices for Canadian gas have fallen to less than $1/Mcf.
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