Canada's hard-hit oil and gas drilling industry has noticed an upswing in business.

Calgary-based Trinidad Drilling said Wednesday that 90 per cent of its Canadian drilling fleet is now active.

One analyst says Canadian oil and gas drilling activity is likely to peak at 576 rigs active this season. (CBC)

CEO Lyle Whitmarsh told analysts in a conference call that "activity levels have strengthened in the last few months."

"We expect that demand in specific areas will continue to grow — those that require deeper, high horsepower and new technology will continue to be more sought after as market conditions improve," he said.

The Cardium formation in west-central Alberta is one of those areas. It was first discovered in the 1950s, but companies have been able to increase oil recovery using new technology.

Drilling activity is better than last year, Andrew Bradford, an analyst with Raymond James, said in a commentary. He said activity most likely hit its seasonal peak in Canada last week, with 576 rigs active.

"This is above last year for sure, but in a broader context, it's still nothing to get too excited about," he said, "given that between 2003 and 2008, the rig count peaked between 608 and 757."

As spring approaches and the ground thaws, companies can no longer move heavy equipment over rural roads, muskeg and swampy areas. Drilling pretty much ceases.

With low prices for natural gas, shallow gas drilling — previously a mainstay for the industry — has fallen off this year. Shallow drilling means anything less than about 500 metres deep.

Bradford said the big companies that did most of the shallow drilling are now putting their money into oilsands developments or shale gas formations, which can produce 50 times more oil or gas.

"Once the spring thaw arrives," said Bradford, "these rigs will likely sit idle for much of the remainder of the year."

With files from The Canadian Press