Canada ranks as the world’s fourth-largest oil producer and fifth-largest gas producer, per the International Energy Agency, with most of its oil and a significant portion of its gas exported to the United States. West Texas Intermediate oil prices have fallen approximately 20% to around $63 per barrel since early 2025, influenced by global trade uncertainties and OPEC+ plans to increase output sooner than anticipated. Heavy Western Canadian Select crude, typically priced lower than WTI, currently trades at a discount of about $9.65 per barrel.
Meanwhile, natural gas prices in Canada have risen to approximately C$2 per gigajoule from C$1.50, spurred by the upcoming launch of the country’s first liquefied natural gas export facility on British Columbia’s coast in 2025. This price shift has prompted drillers in the Montney formation, spanning Alberta and British Columbia, to prioritize natural gas and associated liquids like condensate, which is used to dilute oil sands bitumen for pipeline transport. Trevor Rix, Canadian oil and gas research team leader at Enverus, noted: “We think condensate is a good place to be in the next few years as oil sands diluent demand ramps up.”
This trend extends beyond Canada. In the United States, Precision Drilling Corp., a contractor operating in Canada, the U.S., and the Middle East, reports growing interest in gas drilling in the Haynesville and Marcellus formations. Chief Executive Officer Kevin Neveu stated: “Our customers remain cautious regarding oil-directed drilling.” U.S. Energy Secretary Chris Wright, speaking at an Oklahoma City energy conference in April 2025, highlighted that oil prices at $50 per barrel would be unsustainable for U.S. producers.
In Alberta, Canadian Natural Resources Ltd. secured 88 oil and gas licenses in the first quarter, the highest in over a decade, with 59 targeting gas and 29 for oil. ARC Resources Ltd. followed with 54 licenses. The shift toward natural gas reflects a strategic response to market conditions, with condensate demand rising due to increased oil sands production following the Trans Mountain pipeline expansion in 2024.
