Canadians are actively drilling oil prospects to take advantage of high prices and slightly reducing gas drilling because of price fluctuations. This may be the second year in a row that oil well drilling increases in Canada.

According to Nickle's Daily Oil Bulletin, operators drilled 2,235 oil wells in Canada January-June this year, up 28% from 1,746 for first-half 2005. Oil drilling permit applications are up 11% for the first 7 months, year-over-year. The total oil well count for 2005 was 4,822 wells, up nearly 9% from 4,427 oil wells drilled in 2004.

Gas drilling in 2005 declined almost 2% from the year before. But drilling for unconventional gas, chiefly coalbed methane, increased to 3,000 wells, about 20% of the total gas wells drilled last year.

Overall drilling activity is up about 15% this year, with an average of 5,333 rigs active January-June. This increased drilling is facilitated by the growing rig fleet. The Canadian land drilling fleet has nearly doubled in size over the past 10 years, to more than 800 rigs in June 2006 from 460 in June 1996.

Among the more interesting projects in a new collaborative initiative to build new land drilling rigs in Nova Scotia. On Aug. 16 in Halifax, EnCana Corp. announced during a presentation on Deep Panuke development that it would work with the Nova Scotia provincial government to manufacture rigs within the province. EnCana said it would "Commit financial and human resources to facilitate the development of an onshore drilling rig manufacturing operation in Nova Scotia." Production is scheduled to being by Dec.31.

Weather still dictates activity. The late arrival of spring break-up in Canada extended the winter drilling season in first-quarter 2006 but delayed the start of summer exploration and development programs in second quarter. Western Canada experienced heavy rains in June, which slowed drilling.