Low oil and natural gas prices are impacting the industry in Western Canada, leading to a decline in drilling activity. The trend is expected to continue into 2026. North American oil prices are currently below $60 US per barrel, down from over $80 in January. As a result, oil and gas companies are reducing costs, with total capital spending projected to decrease by 5.6% this year and an additional 2.2% in 2026, according to a recent report by Enserva, a Calgary-based organization representing oilfield service companies.
The report indicates that the total number of wells drilled in 2025 is anticipated to decrease by nine percent compared to 2024, with British Columbia experiencing a substantial 16% drop. In Alberta, drilling activity is forecasted to decline by seven percent this year, while a 10% decrease is expected in Saskatchewan. Further decreases of four percent are predicted for both provinces in 2026.
Canadian natural gas prices have also faced challenges, with prices falling below zero in September, leading some companies to halt production to avoid incurring costs to offload the gas. Despite these challenges, Canada has commenced natural gas exports off the B.C. coast with the operationalization of LNG Canada this year. Several other LNG projects are currently in progress or under development.
Enserva’s CEO, Gurpreet Lail, acknowledges the industry’s ongoing adjustments but remains optimistic about the long-term prospects, particularly for natural gas. Lail believes that with the expansion of LNG Canada, Canadian producers stand to benefit from improved global pricing once short-term pressures subside.
The Enserva report paints a bleak outlook for the oil sector in the coming years, with major forecasting agencies not anticipating oil prices to rebound before 2029 compared to 2024 levels. Job cuts in the oil and gas service sector began earlier this year and are expected to persist through 2025, remaining stable in 2026, as per the Enserva report.
Prime Minister Mark Carney and Alberta Premier Danielle Smith are set to announce an agreement in Calgary that would grant the province special exemptions from federal environmental regulations and provide political backing for a new oil pipeline to the B.C. coast.
