Canada’s energy sector expects steady growth despite volatile market

Canada’s energy industry is expected to hold steady in the year ahead, despite what analysts describe as an “evolving and volatile environment.” The Canadian Association of Energy Contractors (CAOEC) projects that 5,709 wells will be drilled in 2026, marking an increase of roughly three per cent compared with this year.

The association also anticipates similar growth in drilling rig operating days and service rig operating hours. “We expect the market to be much more constructive in the second half of 2026,” said Mark Scholz, President and CEO of CAOEC. “That’s where we expect most of the growth in both drilling and service rig operations.”

Alberta Premier Danielle Smith highlighted the significance of Western Canadian participation as global oil demand rises. Some forecasts predict a 25 per cent increase in demand by 2050. “We want Alberta to capture a growing share of a growing market,” she said during the CAOEC State of the Industry announcement.

The positive outlook follows a memorandum of understanding signed last week between the Alberta government and the federal government. The agreement promises action on a west coast pipeline and the removal of the federal oil and gas emissions cap. “Finally, Canada has leadership that recognizes the importance of Alberta’s energy sector for revenue, livelihoods, and quality of life,” Smith added.

Scholz expressed optimism about the long-term impact of the agreement, noting that such a partnership would have been unprecedented a year ago. “We’ve struck a strong balance that positions Alberta and Western Canada to access new markets while supporting well-paying jobs for Canadians,” he said.

While British Columbia Premier David Eby has opposed repealing the coastal tanker ban, Smith encouraged him to keep an “open mind” as discussions move forward. Under the memorandum of understanding, Alberta and British Columbia will need to collaborate to advance the project. The Alberta government aims to submit a proposal to the federal Major Projects Office by July 1, 2026.

CAOEC represents 89 companies across Canada, including land drilling, offshore drilling, and service rig operators. Another industry group, Enserva, recently released its sector outlook, predicting a 5.6 per cent decline in spending this year and a further 2.2 per cent drop in 2026. Despite these challenges, the overall outlook for drilling activity in Canada remains steady, with strong growth expected in the second half of next year.