The industry could see the first annual decline in U.S. shale production since 2000 due to falling natural gas prices.
The U.S. shale gas industry (Figure 1), a cornerstone of the nation’s energy sector, has the potential to hit a notable milestone in 2024 with the first annual production decline since the Energy Information Administration (EIA) began tracking data in 2000. TGS Well Performance Data shows production has dropped by 1% compared to 2023 levels, primarily due to reduced output from the Haynesville and Utica shale plays. This marks a modest but symbolic shift for the industry, which has seen exponential growth for over two decades.
In 2024, U.S. shale gas production averaged 81.2 billion cubic feet per day (Bcf/d) through September, with an additional 22.1 Bcf/d coming from other dry natural gas sources. This keeps the total natural gas production nearly steady at 103.3 Bcf/d, despite the downturn in shale output. The slowdown is attributed largely to a stark drop in natural gas prices, from $9.39/MMBtu in August 2022 to just $1.99/MMBtu by August 2024. Low prices have pressured profitability, prompting producers in key shale regions like Haynesville and Appalachia to scale back operations. Haynesville’s output fell by 12%, and Utica’s dropped by 10%, even as the Permian Basin managed a 10% increase, thanks to its oil-rich wells that benefited from higher oil prices (Figure 2).
Beyond the immediate economic factors, broader industry dynamics are at play. Data from TGS Well Data Analytics reveals that, while major shale plays like the Appalachia Basin and Permian Basin saw growth until recently, overall well counts have declined dramatically across basins, with a tenfold reduction since peak years. However, even with fewer wells, technological advancements have significantly boosted Estimated Ultimate Recovery (EUR), allowing high production rates per well (Figure 3).
Looking forward, the EIA anticipates a slight rebound in 2025, with U.S. dry gas production expected to average around 103.5 Bcf/d. The shale industry’s capacity to balance high EUR values with lower well counts underscores its adaptability. Yet, as the recent downturn shows, price volatility remains a decisive factor, highlighting the delicate interplay between economic conditions and energy production in the U.S. shale sector.
For more information about TGS Well Data Analytics or to schedule a demo, contact us at WDPSales@tgs.com.
