Operators in Canada rig released only 994 wells last month, down seven per cent from last year and the first time the June count has fallen below 1,000 since 1998.

However, the trend to longer wells and the decrease in shallow wells resulted in a decline of only 2.5% for total metres drilled for the month of June to 1.24 million metres from 1.27 million metres in June 2007.

Activity has been slowly building this year as commodity prices surged and producers increased their capital budgets. This week, operators licensed 507 new wells, up from 400 new licences for the same week last year. And total conventional development licences issued so far in 2008 reached 8,394 this week, up 247 from a year ago. Exploration remains in the doldrums with only 1,728 new licences as of July 24, down 607 from last year.

In a year that was widely predicted to bring a drop in drilling activity due to low gas prices at budget time last fall and Alberta's new royalty regime, total metres drilled in the first six months of 2008 were down only seven per cent to 9.09 million metres from 9.76 million metres a year earlier. A three per cent rise in horizontal wells drilled to a record 1,209 wells helped boost the metres drilled count this year.

The number of all wells drilled, however, fell nearly 14% to 6,706 from 7,782 last year with only Manitoba showing an increase from last year. With rainy weather, the second quarter brought only 1,549 wells drilled, down 12.4% from 1,768 a year earlier (the peak year for second quarter drilling was 2001 when 4,362 wells were rig released).

Alberta operators rig released 4,773 wells to the end of June, off 16% from 5,692 last year while operators in British Columbia drilled 441 wells, 16.5% fewer than the previous year.

More oil-prone Saskatchewan saw well counts fall only four per cent in the first half to 1,341 from 1,402 a year ago while Manitoba activity rose to 140 wells from 116 in the first six months of 2007.

Southeastern Alberta was hit hardest by the decline in provincial drilling this year with only 260 wells drilled in the second quarter, down 223 from last year and a mere fraction of the 2,002 wells drilled for the same period in the peak 2004 year. For the first half of 2008, southeastern Alberta saw only 1,647 new wells drilled, down 250 from a year earlier. The only other area with a comparable drop was northeastern Alberta where drilling fell to 563 wells from 775 last year (excluding oilsands evaluation wells).

Eastern Saskatchewan was the hot spot for drilling growth this year with 539 wells drilled to the end of June, up 111 wells or 26% from last year and continuing a multi-year growth pattern. Even more impressive, metres drilled in eastern Saskatchewan climbed 37% to 1.19 million metres. That compares to only 325,500 metres of hole in the first half of 2004.

Manitoba and northeastern B.C. were the only other two PSAC zones which showed an increase in metres drilled this year with the former climbing by 50,348 metres to 173,096 metres and the latter region rising by nearly 12,000 metres to 998,250 metres of hole.

Nearly 37% of all wells drilled this year and given a final status (oil, gas, dry or service) were listed as oil wells, the highest percentage in at least a decade, according to Bulletin records.