Prolonged oil industry slump leads to third cut in Canadian drilling forecast

CALGARY — The Petroleum Services Association of Canada is cutting its 2020 Canadian drilling forecast for a third time as the industry remains mired in a slump expected to extend well into the second half of the year.

The association says it now expects just 2,800 wells will be drilled in Canada this year, down from a nearly 50-year low of 3,100 in its revised forecast in April.

The new forecast for 2020 is 43% lower than the 4,900 wells drilled in 2019.

PSAC interim CEO Elizabeth Aquin says a slow economic recovery, low commodity prices and high debt levels in the industry are preventing a quick recovery from the lows of earlier this year amid an economic downturn caused by the COVID-19 pandemic.

She says a North American crude oil supply surplus means producers have little incentive to explore for and develop new wells.

Last week, Calgary-based Precision Drilling Corp. reported more layoffs and parked drilling rigs as revenue, led by lower activity in its Canadian and U.S. operations, fell by 47% in the second quarter compared to the same period of last year.