April 27, 2011 / 6:59 PM / 7 years ago

Canada's Petroleum Services Association further ups 2011 well estimates

* PSAC further revises drilling estimate by about 2 pct

* Raises oil price forecast to $100/barrel

April 27 (Reuters) - Petroleum Services Association of Canada (PSAC) raised its drilling forecast for 2011 for the second time in three months, but said the increase is “slight” as fewer wells are being drilled due to the use of new techniques like horizontal drilling.

The association, which represents oilfield service companies, now expects 12,950 oil and gas wells to be drilled this year, up 200 wells, or about 2 percent, from its January forecast.

“Additionally, the time and cost commitment are increasing, and the continuing downward trend in the price of natural gas also means a continuing decline in the number of productive natural gas wells,” PSAC said in a statement.

PSAC said the current forecast is based on an average benchmark oil price of $100 per barrel, up from its January forecast of $85 a barrel. While it continues to see average natural gas prices of C$3.85 per thousand cubic feet (mcf).

Natural gas prices NGc1 averaged $4.19 per million British thermal units (mmBtu) during January-March, down 19 percent from last year.

In January, PSAC had raised its 2011 drilling forecast by 500 wells. [ID:nN31105533]

“Even though there are strong signs of recovery, further rebounds in drilling activity are being impacted by the ongoing labour shortage and resultant inability to keep up,” Mark Salkeld, PSAC president, said.

The association said 12,158 wells were drilled in Western Canada last year.

In London, ICE Brent crude LCOc1 touched a high of $125.80 per barrel, while U.S. crude CLc1 hit a high of $113.40 on Wednesday. [ID:nL3E7FR0CO] (Reporting by Arnika Thakur in Bangalore; Editing by Gopakumar Warrier)

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