The drilling group revised its forecast after the Alberta government lowered its royalty take from conventional oil and gas producers and offered incentives for firms that drill costly, technically challenging wells.

Drilling activity began to pick up earlier this year, well before the Alberta government unveiled the results of its review into how the province’s stacks can better compete with regions for energy investment, Herring said. 

“What we observed that was new was there was an investor anticipation that the competitiveness review in Alberta would result in changes that would encourage new investment,” Herring said.

During the first quarter, 54 per cent of Western Canada’s drilling rigs were on the job, compared with the 36 per cent the CAODC had called for in its October forecast. 

The Alberta government program, whose details were fleshed out in May, “will essentially take those investor expectations and ensue that they can be realized for new investment,” Herring added.

The bump in expected activity will translate directly into thousands of jobs, with most of the new ones being created in Alberta.

The CAODC is expecting the number of rig technicians at work in Western Canada will rise to 8,500 from the 5,500 it had previously anticipated.

Each rig also indirectly employees several more workers who help provide various service on location.  In all, some 25,000 people should be employed onsite, with an average of 337 rigs active across Western Canada in all of 2010.

BMO Capital Markets analyst Michael Mazar said activity levels may see a 10 to 15 per cent bump thanks to the royalty changes, which could lead to benefits beyond then energy sector.

“There’s an initial, very quantifiable effect when you’re talking about 2,000, 2,500 jobs instantly being added,” he said.

“There’s a trickle-down effect because those people get paid very well and they spend a lot of money.  They’re not only getting jobs for themselves, but they’re the guys out there buying Ski-Doos and quads and everything else that supports local economies.”

But no matter how positive the royalty changes currently are, activity levels in Alberta will largely be at the mercy of commodity prices staying in their current range or higher, Mazar said.

“Suddenly, if gas prices came back down under $4 again, then it really wouldn’t matter what the impact of the royalties are because the prices are still too low to sustain any activity.”