Canada’s oil and gas sector is expanding field activity at a pace that complicates Ottawa’s energy transition calculus. Baker Hughes counted 162 active rigs in Canada for the week ended May 29, 2026, a jump of 24 rigs from the previous week and 50 rigs from the comparable week a year earlier. That year-over-year increase is about 44.6%, broadly matching reports of a roughly 45% rise in Canadian drilling activity.
This rebound is not happening in a vacuum. Canadian gas output has already been moving higher. The Canada Energy Regulator said natural gas production reached record levels in 2025, averaging about 19.0 billion cubic feet per day and hitting 20.0 Bcf/d in November. The regulator linked the increase to sustained drilling, better recovery, improved well productivity and LNG Canada’s startup.
LNG Canada changes the drilling equation because it gives Western Canadian gas producers a direct route to Asian LNG markets instead of leaving the US as the dominant outlet. Reuters reported in November 2025 that LNG Canada had started production at its second train, with both trains each carrying 6.5 million metric tons per year of capacity and the facility expected to process about 2 billion cubic feet of gas per day.
Oil producers are also watching export optionality. Reuters reported that South Bow is targeting a mid-2027 decision on Prairie Connector, a proposed 550,000-barrel-per-day Alberta-to-Wyoming pipeline that could increase Canadian crude exports to the US by 12%. The company has secured 20-year shipper commitments covering 80% of the proposed capacity, though the project still depends on durable US permitting.
That is the tension. Canada is trying to decarbonize while its upstream sector is finding reasons to drill. Better market access can improve producer economics, but it also raises the stakes for emissions policy, pipeline approvals, Indigenous consultation, labor availability and federal-provincial fights over resource development.
For oilfield service companies, the rig count points to stronger demand for crews, equipment and drilling capacity. But for Ottawa and provincial governments, it narrows the room for vague energy messaging. The sector is no longer behaving like a stranded asset story. It is acting like an industry with new routes to market and a fresh reason to spend.
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One Response
Decarbonization is an antiquated ideological myth of the Trudeau Liberals. With Canada producing 1.5 % of all global CO2, the country has virtually no impact on climate change, whether it doubles or halves its CO2 production. No one cares. So why should the country break its economy, particularly when the two elephants in the room (China and the US) are shrugging their shoulders? Wake up, Canada!