Canada's oil and gas drillers are experiencing a resurgence in activity, with May marking the busiest month since the boom-era of 2014. High oil prices are fueling a new rush for black gold across Western Canada, as drillers report the highest level of action in over a decade.
Record Rig Activity
According to energy technology company Baker Hughes, a total of 160 rigs were actively drilling for oil and gas across Canada in May, representing a 45% increase compared to the same period last year. Analysts at ATB Cormark Capital Markets noted that this is the highest drilling activity since 2014, which was the last major spending boom in the oilpatch before rock-bottom energy prices led to mass layoffs and spending cuts.
Bob Geddes, president of Ensign Energy Services Inc., a Calgary-based drilling company, said, "We're fielding more calls for rigs, probably the busiest I've seen it in 10 years." Ensign is currently running 40 of its rigs in Canada this spring, an increase of nearly 43% over last year, and plans to bring another 10 online through June. Geddes emphasized that "rigs that are running are making money," attributing the surge to the price of oil.
Strong Producing Signals
Before the conflict in the Middle East effectively shut the Strait of Hormuz, triggering an energy crisis, some projections had North American oil prices averaging between US$50 and US$60 per barrel through 2026. However, since the conflict began, oil has surpassed US$100 per barrel several times and is expected to hover in the low US$80 range through this year and into 2027. On Wednesday afternoon, prices were above US$96 per barrel.
Geddes remarked, "Two months ago, if you said oil is going to be the low 80s, you'd pop the champagne." Mark Scholz, chief executive of the Canadian Association of Energy Contractors, noted that the increased rig activity is partly in response to oil prices but also reflects improved confidence across the industry. "We're seeing some really strong producing signals, market signals, but I also think, generally speaking, some good political signals that businesses can take to the bank and start growing again," Scholz said.
Industry Optimism Amid Alberta-Ottawa Deal
Geddes pointed out that at the beginning of this year, some in the industry were skeptical of the federal government's pipeline pledges, but there has since been a shift in tone. "I think a few people in Ottawa are starting to understand that this strong oil price and production are good for all of Canada," he said, expressing optimism about the talks between Alberta and the federal government.
While employment in the oil and gas industry has not yet returned to levels of a decade ago, the outlook is significantly different now, with high oil prices and growing production driving the sector forward.
