Saskatchewan is expected to lead the country in oil and gas drilling in 2017, narrowly surpassing Alberta, according to the Petroleum Services Association of Canada's latest forecast, which was released Wednesday.
There are several reasons why Saskatchewan is expected to surpass Alberta in activity, such as a shallower basin, operational changes, and a more attractive environment for investors.
"Saskatchewan will outperform Alberta in wells drilled for the first time in the 36 years I've been in the industry and probably the first time ever," PSAC president Mark Salkeld told CBC News. "It's a drive to get the wells drilled, completed, producing and getting cash. It's a hole-making factory that they've got going on down there."
Alberta will still lead the country in the amount of oil produced because of the oilsands.
Following a sharp drop in drilling activity after the oil price collapse in 2014, the industry's activity will increase slightly in 2017 compared to the previous year. That's why the service industry is only moderately optimistic about the future. Margins are tight and oil and gas companies are still demanding low costs from service companies to keep expenses in check.
"Everybody's fighting for survival," said Salkeld. "That battle that we've seen to get the costs under control, we're still going to see that for another year."
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This year, 3,950 wells are expected to be drilled in Canada, and 4,175 wells in 2017. The forecasted activity for 2017 is 63 per cent lower than the number of drilled wells in 2014, before the industry's downturn.
PSAC based it's forecast on an average oil price of $52 US a barrel, which may be a conservative estimate, since some forecasters are anticipating crude prices around $56-$60 next year.