A pipe yard servicing government-owned oil pipeline operator Trans Mountain is seen in Kamloops, British Columbia, Canada June 7, 2021. REUTERS/Jennifer Gauthier

Nov 23 (Reuters) - Western Canadian oil and gas producers will drill 27% more wells in 2022 than the previous year, returning to pre-pandemic levels as prices rebound and pipeline projects advance, the Canadian Association of Energy Contractors (CAOEC) said on Tuesday.

Companies are likely to drill 6,457 wells, an increase of 1,363 from 2021 and slightly above 2019's total, the association's Chief Executive Mark Scholz said in a statement. The CAOEC represents energy service companies.

The uptick follows a year in which Enbridge Inc (ENB.TO) completed its Line 3 pipeline replacement project, allowing more oil to flow from Alberta to U.S. Midwest refineries, and as energy consumption recovered as COVID-19 restrictions eased, the CAOEC said.

Two more major pipelines, the Trans Mountain oil pipeline expansion and Coastal Gaslink, are under construction.

Labor shortages have hampered the service industry's efforts, however. CAOEC forecasts that the number of drilling rigs in Western Canada will decrease by eight to 481 rigs next year.

Conventional light oil and condensate production makes up about one-fifth of Canadian crude output, according to the Canada Energy Regulator. The majority of the country's oil production is heavy oil from Alberta's oil sands.

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Oil prices steadied on Friday, but fell for the week on a stronger U.S. dollar and fears that an economic slowdown would weaken crude demand.

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