Updated May 2022
The number of new wells placed on production increased by 66 per cent in 2021 due to rising oil prices. After the global economic shock of the COVID-19 pandemic in 2020, drilling activity picked up in 2021 as restrictions were lifted, causing a surge in economic activity and an increase in demand for refined products, such as gasoline and jet fuel. The number of new wells placed on production is projected to increase by 22 per cent in 2022 as drilling economics continue to improve alongside higher prices. From 2022 to 2031, activity is expected to improve as additional market access and prices strengthen.
Figure S4.3 shows the average daily production of crude oil and the number of new wells placed on production.
Well Activity in 2021
In 2021, 1765 new crude oil wells were placed on production compared with 1061 in 2020. Increases in drilling activity were due to higher prices. Along with the number of new wells placed on production, the average well length continued to increase, supporting higher productivity rates. Of the total number of new wells placed on production in 2021,
- 29 (2 per cent) were vertical wells (an increase of 107 per cent from 2020) and
- 1736 (98 per cent) were horizontal wells (an increase of 66 per cent).
Table S4.1 shows the crude oil production and wells placed on production in 2020 and 2021 and includes forecasts to 2031.
Demand for crude oil is on track to return to pre-pandemic levels. However, despite higher prices, some producers continue their disciplined capital spending by focusing on optimizing existing assets, reducing debt, and paying dividends to shareholders. Producers investing in new wells either targeted high-value light density crude oil or drilled in areas requiring lower capital costs.
Producers continued to cut costs through advancements in drilling and completion, allowing some producers to drill longer wells in shorter periods of time at a lower cost per metre. For horizontal wells using hydraulic multistage fracturing, the increased fracturing stages per well and longer well lengths resulted in higher production rates and slower decline rates.
Figure S4.4 shows the wells placed on production in 2021 by Petroleum Services Association of Canada (PSAC) area and their distribution in the Cardium Formation, Viking Formation, and Mannville Group.
Forecast for 2022 to 2031
The total number of new oil wells placed on production is expected to reach 2110 by 2031. However, the number of new wells is projected to be less than the highs reached between 2010 and 2014 (Figure S4.5), because of relatively lower oil prices and that fewer vertical wells are being drilled in favour of longer and more productive horizontal wells. Producers are expected to continue targeting light crude oil because of its higher economic value. This should increase activity in the Cardium Formation, Montney Formation, and Mannville Group.