Gas is strong – sort of – rigs are busy again – sort of – and now PSAC is encouraged enough by what’s going on in the field – sort of – to cautiously raise its 2010 drilling activity forecast by 1,000 wells.

With the 12 per cent boost, the association now is forecasting 9,000 wells will be drilled, on a rig release basis, in western Canada this year – a far cry from the 20,000 plus that were being punched down just a couple of years ago, but an improvement none the less. Last year, a mere 8,450 wells were drilled in western Canada, the lowest total since 1992, when the patch saw less than 4,500 wells drilled.

What drove the forecast higher, says PSAC boss Roger Soucy, are stronger commodity prices, particularly for natural gas – which is the backbone of the conventional energy business in western Canada generally and Alberta in particular. For 2010, PSAC is projecting gas at AECO will average C$5.50 per mcf, while WTI oil will average US$74 per barrel.

“Industry is expecting commodity prices to strengthen further this year,” he says. “Improved prices led to a spurt in drilling activity in December 2009, and we expect stronger pricing to continue to impact drilling levels as we move through 2010.”

Soucy remains cautiously optimistic. Surging field activity has a few more executives smiling in downtown Calgary – 556 rigs are making hole in western Canada this week, compared to 329 as 2009 came to a close – but any lasting signs of recovery won’t come for a few weeks yet.

“The commodity pricing signals have been positive so far but this may not be the quick and complete turnaround everyone is hoping for. The real test will come after spring break-up.”