According to a forecast by the Petroleum Services Association of Canada for the first time in 39 years more oil wells will be drilled then natural gas wells with the association forecasting 4,100 oil wells will be drilled next year, compared to 3,200 natural gas wells. However, according to the Canadian Association of Petroleum Producers 500 more natural gas wells ill be drilled than oil wells in 2010. Both groups do agree that less natural gas wells are being drilled.
First it’s important to understand that the change is not because there is more oil drilling. Its because there is less conventional natural gas drilling which has yielded to shale gas as the primary target for natural gas producers. Conventional natural gas drilling has a higher break even point and higher risk consideration to shale gas. Conventional gas plays have lower life cycles, and lower production rates requiring ongoing new vertical drilling activity to maintain overall production numbers. Shale gas drills vertically once, and then horizontally into the shale formation in different directions. Shale gas wells are showing long life cycles with higher production rates after the initial production decline. The bottom line is shale gas has changed the drilling process and requirements.
Natural gas drilling is king in British Columbia. The decline in conventional drilling is primarily in Alberta and having a major negative impact on that province’s economy, while shale gas has been a boom for British Columbia due to the prolific shale gas plays in the Horn River and Montney basins.
Calgary Herald: Oil to Top Gas for 2010 Drilling
