Horizontal wells are powering U.S. oil and gas growth—but at a cost: rapid declines demand constant drilling.
- Tony Zelinski
- 3 days ago
- 2 min read
The Challenge of Sustaining Production
The U.S. Energy Information Administration (EIA) highlights a critical trend in modern energy production: horizontal wells, while highly productive at the start, decline much faster than traditional vertical wells. This means operators must continuously drill new wells to maintain overall output.
Between 2010 and 2024, production from new wells in the Lower 48 states (L48) consistently offset declines from older wells. But the pace of drilling has accelerated as horizontal wells have come to dominate the landscape. By December 2024, 94% of crude oil and 92% of natural gas in the L48 came from horizontal wells.
Crude Oil: Declines and Offsets
In December 2023, L48 crude oil production averaged 11.0 million barrels per day (b/d).
By December 2024, output from wells drilled in 2023 or earlier had fallen to 6.7 million b/d, a 4.3 million b/d decline.
Operators drilled more than 15,000 new wells in 2024, including 11,700 horizontal wells, which added 4.4 million b/d.
Net result: crude oil production edged up to 11.2 million b/d.
Natural Gas: Similar Story
From December 2023 to December 2024, natural gas production from older wells dropped from 115.4 billion cubic feet per day (Bcf/d) to 88.4 Bcf/d.
New wells contributed 28.0 Bcf/d, pushing total L48 natural gas production to 116.5 Bcf/d.
Again, horizontal wells carried the load, but their steep decline rates mean the cycle of drilling never stops.
Why Horizontal Wells Dominate
Horizontal drilling surged in the mid-2000s because it allows operators to recover more hydrocarbons quickly after initial production begins. The trade-off: high initial output but steep declines.
This dynamic explains why the industry must keep drilling aggressively to sustain production levels.
What This Means for Energy Markets
Operational intensity: Companies must plan for continuous drilling programs, not just one-time investments.
Capital demands: Sustaining production requires significant ongoing capital, especially in shale regions.
Market resilience: Despite declines, the ability to offset them with new wells has kept U.S. oil and gas production strong.
Long-term risk: Reliance on horizontal wells raises questions about sustainability, costs, and environmental impacts.
Final Takeaway
Horizontal wells have transformed U.S. energy production, enabling record levels of oil and gas output. But their rapid decline rates create a treadmill effect: operators must keep drilling at a relentless pace to maintain supply. This dynamic will shape investment strategies, market forecasts, and energy policy for years to come
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