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The dramatic drop in oil prices has spurred an oil and gas trade group to knock its previous forecast for 2015 drilling by nearly 50 per cent to 5,320 wells.

The mid-year update to the drilling activity forecast released Thursday by the Petroleum Services Association of Canada was a decrease of 4,780 wells from PSAC’s original forecast last October.

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The outlook is based on West Texas Intermediate crude averaging US$53 a barrel, Alberta natural gas selling for $2.50 per thousand cubic feet and the Canadian dollar averaging $0.77 versus the U.S. dollar.

“Oil prices dropped from an average of $84.40 US in October 2014 to an average of $47.83 in March 2015,” PSAC president Mark Salkeld said in a statement. “It’s no surprise that an almost 44 per cent drop in oil prices has led us to forecast a similar decline in drilling activity for the year, compared to our October 2014 forecast.”

PSAC estimates there will be 2,976 wells drilled in Alberta, 1,507 in Saskatchewan and 270 in Manitoba — all lower than the October forecast — but the drilling outlook in British Columbia up five wells to 560.

PSAC has estimated 11,255 wells were rig-released in 2014. The association represents companies in the oilfield service, supply and manufacturing sector that has been hard hit by layoffs with the decline in oil prices in recent months.

Calgary Herald