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Western Canada’s oil and gas sector is facing a sharp slowdown as drilling activity plummets in response to collapsing commodity prices. The region that once promised explosive growth is now confronting a sobering reality: fewer rigs, fewer jobs, and mounting uncertainty.
What Happened
Drilling activity in Western Canada is experiencing a significant contraction, with projections showing a 9% decrease in total wells drilled throughout 2025. This marks a reversal from earlier optimism when industry leaders anticipated rig shortages and surging demand. The shift reflects broader challenges gripping the sector as oil and natural gas prices continue their downward trajectory.
Regional rig counts tell a mixed but largely concerning story. British Columbia has seen the sharpest decline, dropping 63% in recent comparisons, while key drilling hubs like Bonnyville and Drayton Valley have experienced double-digit reductions. Alberta remains the most active province but has also contracted slightly, underscoring weakness across multiple regions.
Why It Matters
Job losses are mounting as companies scale back operations and defer drilling campaigns. The ripple effects extend far beyond the oil patch—service providers, equipment suppliers, and communities dependent on industry activity face mounting economic pressure.
The contrast with earlier 2024 projections is stark. Industry executives had expected infrastructure investments like the Trans Mountain Expansion pipeline and LNG Canada facilities to sustain robust drilling demand through 2025. Instead, weak commodity prices have overshadowed these infrastructure gains, forcing producers to curtail spending and postpone development plans.
Key Details
Forecasts for 2025 reveal quarterly volatility. Drilling rig counts are projected to fluctuate significantly, ranging from 126 active rigs in Q2 to 221 in Q4, reflecting seasonal patterns and lingering market uncertainty. The average active rig count for the full year is expected to hover around 190, compared to 168 in 2024—a modest increase that masks underlying sectoral weakness.
Service rig activity tells a similar story, with workable fleet utilization projected to dip to 56% in Q2 before recovering partially in subsequent quarters. Operating hours per working rig are expected to remain compressed, indicating underutilized capacity across the industry.
Wells drilled are forecast at 6,604 for 2025, representing a nominal increase from 2024 levels but requiring substantially more operating days to achieve, suggesting less efficient operations and extended project timelines.
What Comes Next
The trajectory for Western Canadian drilling hinges on global oil and natural gas price movements. Without meaningful price recovery, the sector faces prolonged headwinds. Industry consolidation, workforce reductions, and strategic portfolio adjustments are likely as companies adapt to a lower-for-longer commodity environment.
Producers and service providers must navigate this downturn strategically, balancing operational efficiency with long-term asset positioning for when market conditions improve.
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