The steep falloff of unconventional wells and the risks of underinvestment
Most conversations about oil and gas tend to focus on demand, but the supply side is just as critical. Based on IEA’s new report on global oil and gas declines, every field in the world declines naturally over time, and since 2019 nearly 90% of upstream investment has been directed toward offsetting these declines rather than expanding output. That means even modest reductions in investment risk stalling production.
The U.S. has become the world’s leading oil and gas producer largely because of its unconventional resources. While conventional oil once dominated, its share of global supply has dropped from 97% in 2000 to about 77% in 2024. Gas is still about 70% conventional, but U.S. shale now provides much of the rest. This shift has given the U.S. an outsized role in global energy markets, but it also creates unique vulnerabilities.
Unlike conventional supergiant fields in the Middle East or Russia, where decline rates average just 2–3% a year, unconventional wells decline at breakneck speed. Shale production can fall by more than a third in its first year and another 15% the following year. This makes the U.S. system highly dependent on continuous drilling and reinvestment. If capital flows slow, production drops quickly. Figure 1 illustrates the impact of upstream investment on regional production trends. Without new investment, U.S. output would drop by 75% between 2025 and 2035. In contrast, regions with larger conventional resource bases, such as Russia and the Middle East, would face a more gradual decline of about 45% over the same period. In Figure 1, the green arrows highlight how continued investment in post-peak fields, ramp-ups, legacy projects, approved developments, and unconventional resources help sustain production.
Figure 1. Impact of upstream investment on regional production trends. Green arrows show the production added from continued investment in post-peak fields, ramp-ups, legacy projects, approved developments, and unconventional resources (Source: IEA).
Conventional fields can soften declines through workovers, infill drilling, or waterflooding, but large-scale projects often take nearly two decades to progress from discovery to production. Shale, by contrast, delivers output much faster, making it essential to balancing global supply. The tradeoff, however, is rapid depletion: without steady reinvestment, U.S. production would fall sharply long before new conventional projects elsewhere could come online. Economics also play a critical role. While ample unconventional reserves remain, sustaining output at current global prices is increasingly challenging. As tier-1 acreage is exhausted, operators are pushed into tier-2 zones with thinner margins, amplifying cost pressures and investment risks.
This dynamic has broader implications. As U.S. shale growth slows, global production will increasingly concentrate in regions with slower-declining conventional reserves, particularly the Middle East and Eurasia. That concentration raises questions about energy security and the balance of power in oil and gas markets.
To evaluate U.S. oil production historically and forward-looking, we used the TGS Well Data model, which provides up-to-date insights across both conventional and unconventional wells in all major shale plays. By combining active well production data with Baker Hughes Rig Count activity, the model tracks historical output and forecasts new well production over the next year, offering a clear view of U.S. unconventional trends. Examining production by basin, as shown in Figure 2, helps energy professionals identify high-potential regions, monitor decline rates, and compare conventional versus unconventional performance.
Recent Midland Basin wells illustrate the challenge: type curve analysis of Martin County wells that began producing since 2022 shows output falling by roughly 65% after the first year and an additional 35% by the end of the second year. While declines vary by landing zone and well design, the trend underscores the capital intensity of sustaining production.
These insights enable operators, investors, and policymakers to prioritize reinvestment, plan development strategies, and make informed capital allocation decisions to sustain production amid rapid unconventional declines. Critically, however, this model assumes relatively low volatility in U.S. onshore rig count. If current trends of declining rig counts persist, this could be an overly optimistic forecast.
Figure 2. U.S. crude oil production by basin (Source: TGS Well Data).
The takeaway is clear: sustaining U.S. unconventional production requires constant reinvestment. Policymakers, investors, and operators must prioritize capital allocation to shale and tight oil if the U.S. is to maintain its role as a global energy leader. Without it, production will erode rapidly, shifting supply back toward conventional supergiant fields abroad.
To explore TGS available well data or schedule a demo, contact us at WDPSales@tgs.com.
