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Released November 07, 2025 | SUGAR LAND
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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)
U.S. territorial waters are the only place for increased oil production by next year. Lower 48 production is on pace to decline by 1% annually to average 11.1 million barrels per day (BBL/d) by next year. Inland gas production, not counting Alaska, is expected to increase by around 3% to average 115.3 billion cubic feet per day (Bcf/d), according to the U.S. Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy.
That compares to an expected annual increase of nearly 2% for crude oil for this year and a 4% increase in natural gas. Operators have been able to do more with less by using multi-bore wells and long laterals that can extend for miles from the actual rig. Those horizontal wells, however, have a high rate of decline.
"To offset the increasing declines, operators today must bring on new wells to sustain or increase production levels," EIA analysts wrote Wednesday.
At the end of last year, EIA found that horizontal wells accounted for 94% of the crude oil production and 92% of the natural gas production from the Lower 48 states. Improved drilling technology and gains in efficiency allow for operators to get more production, but well economies are declining and there may be a need to tap more expensive areas to keep up, EIA found.
On Thursday, U.S. supermajor ConocoPhillips (Houston, Texas) said it expected to produce around 2.4 million barrels of oil equivalent per day this year, with annual growth in 2026 only at 2% at the high end.
In the Bakken, a standout during the shale boom in the early 2000s, the North Dakota government reported that oil production was down 1% to August, the last full month for which that state published data. Nathan Anderson, director of the North Dakota Department of Mineral Resources, added that "rigs have moved out of the heart of the basin."
Case in point for North Dakota. Bison Pipeline LLC, a joint venture between TC Energy (Calgary, Alberta) and ONEOK (Tulsa, Oklahoma), wants to increase the gas capacity on the Northern Plains network from 420 million cubic feet per day to 430 million cubic feet per day.
Subscribers to Industrial Info's Global Market Intelligence (GMI) Production Project Database can learn more about the Bison project here.
The economy itself, meanwhile, could further complicate issues in the U.S. shale patch. West Texas Intermediate, the U.S. benchmark for the price of oil, was trading at around $60 per barrel on Thursday, which is near the break-even point for many drillers. By next year, WTI is expected to average $48.60 per barrel.
By the Numbers
Summary
Horizontal wells accounted for nearly all of the inland U.S. oil and gas production during the first half of the year. Productivity in those wells decline rapidly, however, and more drilling may be needed to sustain current levels.We Need More Wells
With oil and gas production levels expecting only marginal variances by next year, the U.S. Department of Energy said new wells are necessary to at least sustain production.U.S. territorial waters are the only place for increased oil production by next year. Lower 48 production is on pace to decline by 1% annually to average 11.1 million barrels per day (BBL/d) by next year. Inland gas production, not counting Alaska, is expected to increase by around 3% to average 115.3 billion cubic feet per day (Bcf/d), according to the U.S. Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy.
That compares to an expected annual increase of nearly 2% for crude oil for this year and a 4% increase in natural gas. Operators have been able to do more with less by using multi-bore wells and long laterals that can extend for miles from the actual rig. Those horizontal wells, however, have a high rate of decline.
"To offset the increasing declines, operators today must bring on new wells to sustain or increase production levels," EIA analysts wrote Wednesday.
At the end of last year, EIA found that horizontal wells accounted for 94% of the crude oil production and 92% of the natural gas production from the Lower 48 states. Improved drilling technology and gains in efficiency allow for operators to get more production, but well economies are declining and there may be a need to tap more expensive areas to keep up, EIA found.
On Thursday, U.S. supermajor ConocoPhillips (Houston, Texas) said it expected to produce around 2.4 million barrels of oil equivalent per day this year, with annual growth in 2026 only at 2% at the high end.
In the Bakken, a standout during the shale boom in the early 2000s, the North Dakota government reported that oil production was down 1% to August, the last full month for which that state published data. Nathan Anderson, director of the North Dakota Department of Mineral Resources, added that "rigs have moved out of the heart of the basin."
Basins Evolve Over Time
Elsewhere, as basins mature, lighter molecules associated with natural gas are released more readily, while the heavier oil stays trapped in subsurface pores. First commercial oil was discovered in the United States in Pennsylvania in the late 1800s and basins there are now the highest inland gas producers in the country.Case in point for North Dakota. Bison Pipeline LLC, a joint venture between TC Energy (Calgary, Alberta) and ONEOK (Tulsa, Oklahoma), wants to increase the gas capacity on the Northern Plains network from 420 million cubic feet per day to 430 million cubic feet per day.
Subscribers to Industrial Info's Global Market Intelligence (GMI) Production Project Database can learn more about the Bison project here.
Oil Prices Don't Support Revenue
Apart from geological issues in shale, U.S. tariff policies may be an impediment for the industry. President Donald Trump imposed blanket tariffs on steel and aluminum, creating headaches for a domestic industry that doesn't make much of the tubular products for pipelines.The economy itself, meanwhile, could further complicate issues in the U.S. shale patch. West Texas Intermediate, the U.S. benchmark for the price of oil, was trading at around $60 per barrel on Thursday, which is near the break-even point for many drillers. By next year, WTI is expected to average $48.60 per barrel.
By the Numbers
- $48.60: average per-barrel WTI price for crude next year creates industry pressures
- $94% of crude oil production in December 2024 was derived from horizontal wells 11.1 million barrels per day: average Lower 48 oil production for next year marks a decline
- $48.50: expected WTI average for 2026
- More drilling may be needed to at least sustain U.S. oil and gas production
- From geology to markets, headwinds are blowing in the U.S. energy sector
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Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
