Low oil and natural gas prices are negatively impacting the industry as drilling activity decreases in Western Canada, with further declines anticipated in 2026. North American oil prices are currently below $60 US per barrel, down from over $80 in January. Consequently, oil and gas companies are reducing costs, with total capital spending expected to drop by 5.6% this year and an additional 2.2% in 2026, according to a report by Enserva, a Calgary-based organization representing oilfield service companies.
The report forecasts a 9% decrease in the total number of wells drilled in 2025 compared to 2024, including a significant 16% decline in British Columbia. In Alberta, drilling activity is projected to decline by 7% this year, while a 10% decrease is expected in Saskatchewan. Further declines of 4% are anticipated in both provinces in 2026.
Canadian natural gas prices have also faced challenges, with prices even dropping below zero for a period in September, leading some companies to halt production to avoid giving away gas for free. This year, Canada initiated natural gas exports off the B.C. coast through the operations of LNG Canada, with several other LNG projects in various stages of development or construction.
Enserva’s CEO, Gurpreet Lail, commented that although the energy industry in Canada is currently adjusting, the long-term outlook, particularly for natural gas, remains positive. The report indicates a challenging outlook for the oil sector in the coming years, with major forecasting agencies not expecting oil prices to recover to 2024 levels until 2029.
Oil and gas service companies have already started reducing jobs this year, a trend expected to continue through 2025 and remain stable in 2026, as per the Enserva report. Additionally, 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 laws and provide political support for a new oil pipeline to the B.C. coast.
