COMMENTARY: Top 10 Canadian Energy Industry Predictions for 2026 – Yogi Schulz

By Yogi Schulz

In 2026, the following 10 predictions will heavily influence the direction of the Canadian oil and natural gas industry. Overall, the forecast is for weak prices, rising production as demand continues to grow and slightly reduced political risk.

1. AI data centre proposals will accelerate

AI data centre proposals, especially those contemplated for Alberta, will accelerate toward construction and operation and increase natural gas consumption. The reasons include:

• Northern Alberta has the advantages of abundant, cheap natural gas for electricity generation, inexpensive land, access to water, cool temperatures to reduce air conditioning and sufficient infrastructure.
• The pro-business attitude of the Alberta government is smoothing the permitting process.
• The suspension of the federal government’s Clean Electricity Regulations, which would have precluded the use of natural gas for electricity generation.
• Alberta allows private investment in electricity generation and transmission, unlike other provinces.
• The federal government’s support, as stated in the Memorandum of Understanding (MoU) between the Government of Canada and the Government of Alberta.
• The Alberta government and Albertans operate a business-friendly environment.

In 2026, we can expect approval of the first few AI data centres, the start of construction and an increase in proposals. For additional details, please read: Alberta Offers Enormous Advantages for AI Data Centres.

2. Weak crude oil prices will continue

The global crude oil market is oversupplied because of the following:

• OPEC+ is increasing crude oil production in an attempt to gain market share.
• Increasing crude oil production in Canada, Guyana, and Kazakhstan, among others.
• Weak outlook for global economic growth, with demand growth slowing primarily due to uncertainties surrounding U.S. tariffs.
• Sanctions imposed on Iran, Russia, and Venezuela are reducing the prices these countries receive, but not their sales volumes.
• The new U.S. goal to rebuild the Venezuelan oil and natural gas industry, although it will take years, will increase supply.

Even the following military events, which interfere with crude oil exports, are unlikely to keep crude oil prices from weakening:

• The U.S. Navy is blockading crude oil shipments from Venezuela.
• Ukraine is bombing empty Russian tankers in the Black Sea.
• Ukraine is bombing Russian energy infrastructure, including Russian oil terminals in the Black Sea, which also affects Kazakhstan’s exports.

3. Weak natural gas prices will continue

The global natural gas market is oversupplied due to abundant production that can more than meet significantly increasing demand caused by:

• Shifting the energy source for electricity generation from coal and oil to natural gas.
• Additions to LNG export capacity, primarily in the U.S. and Qatar, consuming a significant portion of this record production.
• Rapidly growing electricity consumption of AI data centers.

The combined natural gas demand to supply Canada’s four permitted LNG export facilities, LNG Canada, Tilbury LNG, Woodfibre and Cedar, will not be enough to raise prices.

Even the following potentially disruptive events will not increase prices much:

• The near elimination of European purchases of Russian LNG. The U.S. and Qatar will benefit from additional sales.
• Sanctions imposed on Iran and Russia are reducing the prices these countries receive, but not their sales volumes.
• Russian natural gas and Arctic LNG volumes sold to China continue to increase because China is not honouring the sanctions.

4. MoU implementation progress will be slow

The MoU between the Government of Canada and the Government of Alberta represents a significant improvement in Alberta’s relationship with the current Liberal government compared with the previous one.

The MoU addressed some of Premier Smith’s demands:

• Guaranteeing Alberta full access to unfettered oil and gas corridors to the north, east, and west.
• Repealing Bill C-69, aka “No New Pipelines Act.”
• Lifting the tanker ban off the B.C. coast imposed by Bill C-48.
• Eliminating the oil and gas emissions cap, which is a production cap.
• Scrapping the Clean Electricity Regulations (CER), which set limits on GHG emissions from fossil fuel-based electricity generation.
• Ending the prohibition on single-use plastics.
• Abandoning the net-zero car mandate.
• Returning oversight of the industrial carbon tax to the provinces.
• Halting the federal censorship of energy companies.

However, progress on implementing the MoU depends on:

• Clarifying the details of some points.
• The cooperation of multiple parties.
• Minimizing the likelihood of stalling lawsuits by some groups.
• The federal government is not complying with the terms of the MoU. Some see the recent announcement of new methane-emission reduction regulations as a step back.

In 2026, we can expect both progress and disappointments in implementing the MoU.

5. New Canadian pipeline progress will be slow

The proposed Alberta bitumen pipeline project, capable of transporting at least 1 million barrels a day, faces multiple hurdles despite the optimistic tone of the MoU between the Government of Canada and the Government of Alberta. The goal of reducing pipeline project risks sufficiently to attract a private-sector group of investors to finance, construct, and operate the pipeline faces these hurdles:

• Demonstrating progress on Pathways, the world’s largest carbon capture, utilization, and storage (CCUS) project, when the details of government subsidies remain to be worked out.
• Demonstrating significant consultation with Indigenous leaders and groups, some of whom have repeatedly stated their opposition.
• Collaborating with the government of British Columbia, which has repeatedly stated its opposition.
• Overcoming a permitting process that remains indeterminate, even with the introduction of the Major Projects Office.

The proposed date of on or before July 1, 2026, for submitting an application for a low-emissions bitumen pipeline to the Major Projects Office seems unlikely.

6. Energy industry will implement AI applications

Rapid AI advances have captured the attention of many in recent years. AI headlines promise vast increases in productivity and new applications previously impossible. However, in the oil and natural gas industry, the impact of AI is more practical—streamlining operations rather than inventing new exploration and production technologies or conquering new markets.

In 2026, we can expect more AI adoption as AI software becomes more robust and companies become more confident in the technology. For additional details, please read: How Will AI Impact the Oil and Natural Gas Industry?

7. Canadian crude oil production will increase

The oilsands and unconventional crude oil producers have announced modest increases in their 2026 production forecasts.

The TMX pipeline will reach full capacity in shipping volumes later in 2026. If the U.S. Navy’s blockade of crude oil shipments from Venezuela continues for some time, expect Canadian crude oil shipments by rail to the U.S. to increase.

8. Canadian natural gas production will increase

Canadian natural gas production will increase modestly:

• To fill the increasing LNG demand from LNG Canada.
• As a by-product of increasing unconventional crude oil production.
• Through the capture of more methane venting.

9. Foreign investment in Canadian oil and natural gas will increase

Despite various risks associated with investing in Canadian oil and natural gas, some investors have made acquisitions, and others are evaluating investments in the Montney area.

Some of the interest in Canadian opportunities stems from the perception that production in the massive Permian Basin in West Texas has plateaued and is heading into a long-term decline.

For additional details, please read: U.S. Oil Companies, Energy Investors’ Looking at Canada Again’ Amid Flurry of Deals.

10. Energy transition goals will become more modest

European nations and Canada are revising and extending their ambitious energy transition goals due to the following developments:

• The high cost of renewable electricity generation.
• Unaffordable energy subsidies.
• Unsustainable budget deficits.
• The threat of deindustrialization due to high energy prices.
• A reluctance to build more nuclear-powered electricity generation.
• The need to shift government spending to defence.
• Lower crude oil prices are lowering gasoline prices. That trend will reduce interest in buying electric and hybrid vehicles.

Together, these developments undermine efforts to achieve a rapid energy transition goals to address climate change. As a result, global demand for crude oil and natural gas will last longer.

Overall, these 10 predictions suggest a modest increase in activity in the Canadian energy industry in 2026.

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Yogi Schulz has over 40 years of experience in information technology in various industries. He writes for Engineering.com, EnergyNow.ca, EnergyNow.com and other trade publications. Yogi works extensively in the petroleum industry to select and implement financial, production revenue accounting, land & contracts, and geotechnical systems. He manages projects that arise from changes in business requirements, the need to leverage technology opportunities, and mergers. His specialties include IT strategy, web strategy, and systems project management.

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