GORDON FELLER, Contributing Editor
INDICATORS AFFECTING ACTIVITY
Fig. 1. Depth of Marcellus shale base. Image: Penn State Marcellus Center for Outreach and Research (MCOR).
Why has there been a retreat? The answer is straightforward: Shale industry leaders know that the explosive growth of U.S. shale is now fading. This has also become quite apparent to the financiers, who've backed them with both debt and equity capital.
The U.S. Energy Information Administration (EIA) has compared 2024 shale production numbers with 2023 shale output totals. EIA estimates that production decreased slightly in the Marcellus and Utica, yet shale output increased nearly 13% in the Permian basin during 2024. Looking at shale production at the national level, it’s interesting to note that it has held fairly steady, decreasing by less than 1%, according to EIA’s estimates.
Natural gas production generally affects domestic prices, and this EIA analysis makes it clear that Henry Hub natural gas spot prices hit a historic low in 2024. EIA’s analysis points to the fact that robust U.S. natural gas supply and limited growth in domestic consumption affected the prices.
According to JP Morgan’s commodities research team, “the total number of active oil companies in the shale sector has decreased 23% since 2021, with further reductions expected in 2025 and 2026. Currently, nearly 70% of total U.S. production is controlled by public producers, up from 56% in 2019, which has significant implications for production growth. Although private producers contributed to about 40% of supply growth in 2023, their share of overall production and influence on annual supply growth has been curtailed by M&A activity, dropping to only 20% in 2024.”
Fig. 2. Thickness of Marcellus shale. Image: MCOR.
The number of active drilling rigs against record U.S. crude production numbers shows that things are not always what they seem. We asked KPMG’s U.S. Energy Leader, Angie Gildea, for her guidance on this: “Leveraging advanced data and technology, U.S. oil and gas producers have achieved remarkable efficiency gains. It's not just about ‘drill, baby, drill’ anymore; it's about producing more with less, and using operational precision to optimize resources.”
These trends are a testament to the adaptability of the U.S. energy sector. Gildea thinks “it's about balancing robust production with strategic investments and operational resilience. As we look ahead, companies must continue to focus on innovation and streamlining their operations
to meet market demand while navigating an evolving geopolitical and economic landscape.”
GEOLOGICAL REALITIES/CONDITIONS
There are sone geological realities challenging firms that invest in Marcellus and Utica E&P. The Marcellus shale occurs as deep as 9,000 ft below the surface. At greater depths, the overlying rocks cause greater pressure in the Marcellus formation, which can result in higher production rates, if properly stimulated. In general, with greater depth, the natural gas contains higher proportions of methane and less “wet” gas components, namely propane, butane and ethane, Fig. 1.
Fig. 3. Depth of Utica shale. Image: MCOR.
The organic-rich, gas-producing layers of the Marcellus range from less than 5 ft thick to more than 250 ft thick, Fig. 2.
Regarding the depth to the top of the Utica shale: In the northern part of New York state, Utica shale equivalent is exposed at the surface. To the west, the Utica shale is at a relatively shallow depth and has not generated hydrocarbons, Fig. 3.
Estimates for the thickness of the Utica shale, and equivalents, include relatively organic carbon-rich intervals, above and below, which are capable of generating hydrocarbons (gas, condensate and oil) with sufficient burial and heating, Fig. 4.
Fig. 4. Thickness of Utica shale. Image: MCOR.
According to data from the Ohio Department of Natural Resources’ Division of Oil and Gas, Utica shale wells in Ohio during 2024 produced 24.4 MMbbl of oil and 1.6 Tcf of gas. Comparatively, in 2023, Utica shale wells in Ohio produced 27.8 MMbbl of oil and 2.2 Tcf of gas.
Meanwhile, Pennsylvania ranks second among the top five U.S. gas producers, as shown in an EIA chart: https://www.eia.gov/todayinenergy/detail.php?id=63964
The components that make up Pennsylvania’s natural gas can vary, based on the “thermal maturity” of the gas, which depends on how much temperature and pressure the geologic formation experienced over time. Natural gas can be “dry” or “wet,” with dry gas being more thermally mature and consisting primarily of methane, whereas wet gas is less thermally mature and may contain “natural gas liquids,” including ethane, butane, propane and pentane. These NGLs need to be separated from the methane, to ensure that the natural gas sent to consumers has a consistent BTU content.
Fig. 5. Wet vs. dry gas in Pennsylvania. Image: MCOR.
Wet gas is currently considered to be more valuable in the marketplace, as the NGLs have inherent value as a commodity. In the Marcellus shale, the gas varies from wetter in the state’s western portion to drier in the northeast, as shown on the map in Fig. 5.
In Fig. 6, the geologic cross-section depicts the extent and depth of the Marcellus shale near Clearfield, Pa. Found as deep as 9,000 ft below the surface in northeastern and central Pennsylvania, the Marcellus formation generally becomes shallower at depths of 2,000 ft toward northwestern Pennsylvania. The Marcellus shale covers six states and underlies nearly 75% of Pennsylvania.
Fig. 6. Geologic cross-section of Marcellus shale in western Pennsylvania. Image: MCOR.
Constructing a typical Marcellus well requires vertical drilling, ranging from 5,000 ft to 9,000 ft below the surface, depending upon the depth and thickness of the gas reservoir. When the Marcellus shale is reached, the well is turned, and horizontal drilling occurs for another 3,000 ft to 10,000 ft, or more, Fig. 7.
A network of natural gas pipelines transports methane from areas of active production to a variety of end-users, such as residences, industries, and power generation facilities. Some areas of Pennsylvania are used to store natural gas in deep sandstone formations during periods of surplus, so it can be withdrawn later to meet peak demands, Fig. 8.
ECONOMIC/SECURITY ANGLES
Key officials in the newly installed Trump administration are saying that the Marcellus and Utica shales will remain a primary focus of their attention. They believe that, with the right set of policies and incentives, these resources can, and will, continue to be a cornerstone of U.S. energy production.
Fig. 7. Cross-section of typical horizontal Marcellus well. Image: MCOR.
Development of the Marcellus and Utica shales has generated significant economic benefits: the industry supports hundreds of thousands of jobs, including those in natural gas extraction, pipeline construction and maintenance, and related industries. Both provide substantial tax revenue for state and local governments.
As a massive natural gas reservoir underlying much of the Appalachian basin, the Marcellus is one of the most prolific natural gas fields in the world. During 2023, the region produced, on average, more than 34 Bcf of natural gas per day. Industry executives have consistently made the case that this is an abundant supply of clean-burning natural gas that can help to lower energy costs for consumers and businesses alike.
Advocates for shale—such as new Secretary of Energy Chris Wright—argue that, by increasing domestic natural gas production, the U.S. successfully reduces its reliance on foreign energy sources. This strengthens the nation's energy independence and reduces its vulnerability to global energy price fluctuations.
Natural gas is seen by the Trump team as the cleanest-burning fossil fuel. Their view is that the shift to natural gas for power generation has helped utilities to cope with an historic surge in electricity demand, due in part to the massive build-out of new data centers.
The new DOE team has said that it will work to ensure that the Marcellus and Utica shales both play a lead role in America's energy future. Industry associations, and the companies that they represent, are also making it clear that they remain focused on realizing greater production through technological advancement. Their aim is to enhance both operational efficiency and environmental performance.
Fig. 8. Major gas pipelines and gas storage areas in Pennsylvania. Image: MCOR.
U.S. SHALE INDUSTRY ANALYSIS
Several reports and white papers were published in 2024 that provide insights into the U.S. shale oil industry. What follows are summaries of five key publications.
U.S. Permian Basin Shale Report 2024 (November 2024). This Global Newswire report analyzes the crude oil and natural gas production in the Permian basin, the largest oil-producing shale play in the U.S. It notes that crude oil production in the Permian basin averaged 5.6 MMbpd during first-quarter 2024, a slight decline from 5.8 MMbpd in 2023.
IEA Oil 2024 Report (2024). The International Energy Agency's report projects that the U.S. will be the largest contributor to global oil supply in the medium term, adding 2.1 MMbpd by 2030. However, it also predicts that annual increases across all shale basins are expected to decline from 9% to 3%, citing capital discipline, industry consolidation, and challenges to productivity as limiting factors.
EIA Shale Gas Production Analysis (October 2024). The U.S. Energy Information Administration reported that total U.S. shale gas production from January through September 2024 declined by about 1% to 81.2 Bcfd, compared to the same period in 2023. This marks the first potential annual decrease in U.S. shale gas production since data collection began in 2000.
Rystad Energy's Post-U.S. Election Impact Analysis (January 2025). Triggered by U.S. President Donald Trump, the next four years could prime the liquefied natural gas (LNG) markets for a golden era. Based on his campaign pledge, the returning president’s expected policies are likely to accelerate U.S. LNG infrastructure expansion through deregulation and faster permitting, bolstering global supply.
HSBC Shale Production Forecast (June 2024). HSBC analysts predict that U.S. shale drillers will continue to increase oil production for years before peaking around 2028. They project that U.S. shale fields will increase production by about 400,000 bopd in the next year, with slower growth thereafter. The report challenges OPEC+ expectations of a quicker fall-off in American output growth.
These reports collectively indicate a complex landscape for U.S. shale oil and gas in 2025, with some projecting continued growth while others note potential declines or slowdowns in certain areas of production.
SHALE PRODUCTION PROJECTIONS
Several reports published in 2024 provide projections for U.S. shale oil and gas production in 2025. What follows are summaries of key projections.
BloombergNEF Forecast (August 2024). U.S. oil production is expected to grow 600,000 bpd in 2025, a 50% increase, compared to 2024’s rate of increase. Total U.S. oil production is projected to reach a record 13.9 MMbpd in 2025, a 4.5% increase from 2024.
U.S. Energy Information Administration (EIA) Forecast (September 2024). U.S. crude oil production is projected to average 13.7 MMbpd in 2025, an increase of about 500,000 bpd over 2024. Permian basin oil production is expected to reach 6.3 MMbpd by the end of 2024 and increase by another 300,000 bpd during 2025. Eagle Ford shale production is forecast to increase 4.5% to 1.15 MMbpd in 2025. Bakken shale production is projected to grow 3%, to 1.32 MMbpd in 2025.
EIA Short-Term Energy Outlook (March 2025). Annual average U.S. crude oil production is forecast to reach 13.6 MMbpd in 2025, up 3% from 2024. Net imports of crude oil are expected to fall to 1.9 MMbpd in 2025, down from 2.5 MMbpd in 2024.
Straits Research Oil Shale Market Report (November 2024). The global oil shale market is projected to grow from $4.92 billion in 2025 to $9.21 billion by 2033, with a CAGR of 8.15%.
Deloitte 2025 Oil and Gas Industry Outlook (January 2025). Oil prices are projected to range between $70/bbl and $80/bbl in 2025, with a potential $10/bbl increase, due to geopolitical tensions. Global liquids consumption is expected to increase 1.5 MMbpd in 2025.
These reports collectively indicate a growth trend in U.S. shale oil production for 2025, with the Permian basin playing a significant role in driving this growth. However, challenges, such as low oil prices, peaking productivity gains, and a low inventory of drilled-but-uncompleted wells are also noted.
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