Industry lowers forecast for oil well drilling due to investor uncertainty

The national petroleum trade association has dropped its prediction for the number of oil wells expected to be drilled in 2019, signaling a decline in investor confidence.

The agency, Petroleum Services Association of Canada (PSAC), says a lack of investor confidence has resulted in a steep dip in projects from its original prediction for 2019, issued in Nov. 2018, to its current one, published Tuesday.

In Alberta, the group estimates 2,948 wells will be drilled, a 16.5 per cent decrease from the 3,532 wells predicted in November. In Saskatchewan, that estimated dip is higher at 18 per cent fewer, dropped to 1,994 from the 2,442 predicted last fall.

PSAC says their new estimate suggests 1,000 fewer oil wells will be dug across Canada in 2019, a 15 per cent drop from the original prediction.

"We must find a way to help Canadians understand how responsibly we develop our oil and natural gas resources so that critical infrastructure projects can proceed," president and CEO Gary Mar said in a news release Tuesday.

The number of drilled oil wells is one key marker of investor confidence. Mar cited multiple reasons why that willingness to invest has declined so rapidly.

For one, he noted Alberta's decision to curtail oil production — a cut of 8.7 per cent intended to raise prices — is instead causing uncertainty for investors. That's resulted, Mar said, in producers delaying spending and moving capital funding to other markets.

LNG Canada had made a final investment decision for its Kitimat LNG project, he said, but production activity to supply natural gas to the facility is "still years away."

The quashing of the Trans Mountain pipeline expansion and the proposed environmental assessment overhaul through Bill C-69 also add to that uncertainty.

"Lack of access to markets beyond the U.S. delayed again... and competitive issues continue to weight heavily on Canada's ability to attract capital investment," Mar said.

PSAC has proposed a "Canadian Energy" brand to assist in marketing petroleum products internationally. They said such a venture would allow Canadians to "show how proud they are of our record of robust regulations, high environmental standards, worker safety and human rights."