After a dismally dreary 2009, most agree 2010 can only get better, but there’s no consensus on a long-range forecast.
by Dale Lunan
Asking around the wind-swept corridors of power in downtown Calgary about what 2010 might hold for the western Canadian oil and gas industry elicits an abundance of hedged bets.
On the one hand, most everyone agrees that it can´t be any worse than 2009, a year which saw commodity prices plunge then, at least for oil, recover somewhat, and field activity levels sink to record lows. Land sale bonuses-a reliable barometer of future drilling-fell pretty much off the charts, and shallow gas, the bread and butter of Alberta´s gas basket, virtually disappeared from the landscape as North American gas prices struggled to get up from the mat.
But beyond saying things can´t get much worse, there´s little consensus on whether 2010 will be cloudy with sunny breaks, or cloudy, with periods of rain.
As you´ll read in the compilation of forecasts that follow, the Petroleum Services Association of Canada-like many of the industry associations we polled for their thoughts on 2010-is projecting the status quo will hold this year. It´s forecasting 8,000 wells will be drilled on a rig released basis across the Western Canadian Sedimentary Basin, unchanged from the number it projected last November would be drilled in 2009.
The Canadian Association of Oilwell Drilling Contractors (CAODC) is equally sanguine about 2010: fleet utilization will average 27 per cent-only slightly better than the 24 per cent utilization achieved in 2009-and about 8,500 wells will be drilled in western Canada. The CAODC is basing its 2010 forecast on a North American crude oil price of US$70 per barrel for West Texas Intermediate and a natural gas price at the AECO Hub in Alberta of about C$5.50 per thousand cubic feet.
If anything is going to tip the scales one way or the other this year, it´s natural gas: Alberta is particularly vulnerable to the fluctuations of the North American gas market, and few observers are holding out much hope for improvement until late this year, at the earliest.
"With near-term natural gas prices continuing to flounder under US$3 per thousand cubic feet and storage levels both north and south of the border rapidly approaching maximum capacity, the outlook for natural gas prices this winter remains poor at best," Calgary brokerage Peters & Co. Limited says in its fall 2009 North American Energy Overview. "Our analysis suggests that storage levels will not return to ‘normal´ until the second half of 2010.
"That should help drag gas past the US$6 per thousand cubic feet mark by November, Peters & Co. says-earlier if industrial demand south of the border comes back sooner than expected, if this winter is exceptionally cold, or if supply declines more rapidly than the models suggest.
Canaccord Adams is a little more optimistic: it says gas should average US$6 per thousand cubic feet throughout 2010, as storage surpluses of the last few years-without incremental imports of liquefied natural gas-slip to deficits.
Source: Oilweek Magazine
by Dale Lunan
Asking around the wind-swept corridors of power in downtown Calgary about what 2010 might hold for the western Canadian oil and gas industry elicits an abundance of hedged bets.
On the one hand, most everyone agrees that it can´t be any worse than 2009, a year which saw commodity prices plunge then, at least for oil, recover somewhat, and field activity levels sink to record lows. Land sale bonuses-a reliable barometer of future drilling-fell pretty much off the charts, and shallow gas, the bread and butter of Alberta´s gas basket, virtually disappeared from the landscape as North American gas prices struggled to get up from the mat.
But beyond saying things can´t get much worse, there´s little consensus on whether 2010 will be cloudy with sunny breaks, or cloudy, with periods of rain.
As you´ll read in the compilation of forecasts that follow, the Petroleum Services Association of Canada-like many of the industry associations we polled for their thoughts on 2010-is projecting the status quo will hold this year. It´s forecasting 8,000 wells will be drilled on a rig released basis across the Western Canadian Sedimentary Basin, unchanged from the number it projected last November would be drilled in 2009.
The Canadian Association of Oilwell Drilling Contractors (CAODC) is equally sanguine about 2010: fleet utilization will average 27 per cent-only slightly better than the 24 per cent utilization achieved in 2009-and about 8,500 wells will be drilled in western Canada. The CAODC is basing its 2010 forecast on a North American crude oil price of US$70 per barrel for West Texas Intermediate and a natural gas price at the AECO Hub in Alberta of about C$5.50 per thousand cubic feet.
If anything is going to tip the scales one way or the other this year, it´s natural gas: Alberta is particularly vulnerable to the fluctuations of the North American gas market, and few observers are holding out much hope for improvement until late this year, at the earliest.
"With near-term natural gas prices continuing to flounder under US$3 per thousand cubic feet and storage levels both north and south of the border rapidly approaching maximum capacity, the outlook for natural gas prices this winter remains poor at best," Calgary brokerage Peters & Co. Limited says in its fall 2009 North American Energy Overview. "Our analysis suggests that storage levels will not return to ‘normal´ until the second half of 2010.
"That should help drag gas past the US$6 per thousand cubic feet mark by November, Peters & Co. says-earlier if industrial demand south of the border comes back sooner than expected, if this winter is exceptionally cold, or if supply declines more rapidly than the models suggest.
Canaccord Adams is a little more optimistic: it says gas should average US$6 per thousand cubic feet throughout 2010, as storage surpluses of the last few years-without incremental imports of liquefied natural gas-slip to deficits.
Source: Oilweek Magazine