Low oil and natural gas prices are impacting the industry in Western Canada, leading to a decline in drilling activity that is expected to continue into 2026. North American oil prices are currently below $60 US per barrel, down from over $80 in January. In response to the challenging market conditions, oil and gas companies are implementing cost-cutting measures. According to a recent report by Enserva, a Calgary-based organization representing oilpatch service companies, total capital spending is forecasted to decrease by 5.6 percent this year and an additional 2.2 percent in 2026.
The report also projects a nine percent reduction in the total number of wells drilled in 2025 compared to the previous year, with British Columbia expected to experience a significant 16 percent decrease. In Alberta, drilling activity is set to decline by seven percent in the current year, with a further 10 percent drop anticipated in Saskatchewan. Both provinces are projected to see a four percent decrease in drilling activity in 2026.
The natural gas sector in Canada has also faced challenges, with prices dropping below zero at times, leading some companies to halt production to avoid incurring costs for giving away gas. On a positive note, Canada initiated natural gas exports off the B.C. coast this year through the operations of LNG Canada, with several other LNG projects in various stages of development or construction.
Enserva’s CEO, Gurpreet Lail, acknowledged the industry’s current period of adjustment but expressed optimism about the long-term prospects, especially for natural gas, citing the potential benefits from global pricing as pressures ease in the coming year. However, the Enserva report paints a pessimistic outlook for the oilpatch in the years ahead, with major forecasting agencies not expecting oil prices to recover to 2024 levels before 2029.
The report highlights that oil and gas service companies have been reducing jobs since the spring of this year, with the trend expected to continue throughout 2025 and remain stable in 2026. Additionally, Prime Minister Mark Carney and Alberta Premier Danielle Smith are anticipated to announce an agreement in Calgary that would provide the province with special exemptions from federal environmental laws and extend political support for a new oil pipeline to the B.C. coast.