CALGARY -- A stronger commodity price outlook is resulting in positive news for Canada's oilfield services sector as more wells are expected to be built this year.

The Petroleum Services Association of Canada (PSAC) released a revised forecast for activity Thursday, saying that 3,350 wells will be drilled in 2021.

It is an increase of 29 per cent over its original forecast report back in October.

PSAC updated its figures based on oil prices of US$50 per barrel (West Texas Intermediate), natural gas prices of CDN$2.60 per mcf (Alberta Energy Company) and a stronger Canadian dollar.

The association says the increased forecast is "welcome news" for the industry.

"As expected global economic recovery gradually restores demand, it is helping to improve cash flows and balance sheets for our members’ oil and gas customers," said interim PSAC president and CEO Elizabeth Aquin in a statement. "Recent announcements by Canadian oil and gas companies of their 2021 investment levels show an additional $3.36 billion to $27.3 billion. Although these levels are still lower than the $35.2 billion invested in 2019 and modest compared to the $81 billion spent in 2014, it is an encouraging sign for the oilfield services (OFS) sector that PSAC represents."

While there is increased market interest in renewables, January McKee, the president of AMGAS Services Inc. and PSAC board chair, says global oil and gas demand will still grow.

"PSAC is fighting for members to ensure that Canadian public policy outcomes do not result in carbon leakage that allows other, less responsible countries with lower human rights, environmental, and regulatory standards to supply energy resources to the world and reap the jobs and economic benefits that should be Canada’s," she says.

Despite the good news, there is still "uncertainty" for the OFS, especially from a number of federal government policies.

"What they will mean for competitiveness and capital investment in Canada remains to be seen even with the new Biden Administration in the U.S. signing onto the Paris Accord and forging a green agenda that may present a more level playing field," Aquin says. "All of Canada’s new measures will increase costs to industry and consumers alike. Increasing carbon taxes to $170/tonne in such a short period of time will undoubtedly raise prices on everything from groceries, to heating homes, to consumer goods and all at a time when economic recovery is fragile, employment levels far from robust, and revenues are needed to continually develop new technologies necessary to meet climate goals."

PSAC forecasts the bulk of activity to take place in the second half of 2021 and the majority (67 per cent) will be oil wells.

Alberta is expected to have the highest number of new wells this year at 1,632 while Saskatchewan is projected to see 1,189 new wells.

PSAC says there are modest increases expected in Manitoba, B.C. and Eastern Canada as well.