It has been an eventful year for U.S. shale oil and gas. Low prices—at least in oil—a double down on capital discipline, and drilling efficiency gains that pushed the U.S. total to a record high again were the hallmarks of 2025. The next frontier? Recovery rates.
Recovery rates for shale oil wells are much lower than the rates for conventional wells. The average is around and below 10%, compared with 30% to 35% for conventional wells. Given the prominence of shale basins in the United States’ total oil production, it was only a matter of time before recovery rates came into the spotlight. With the Trump administration’s prioritization of energy, the time was right.
Wood Mackenzie recently reported on the administration’s signals to the energy industry that it is time to start paying closer attention to recovery rates and ways of boosting them. The report cited the assistant secretary of energy, Kyle Haustveit, who was appointed head of the new Hydrocarbons and Geothermal Energy Office at the Department of Energy, as saying the industry should strive to double recovery rates from shale wells.
“Today for oil reservoirs we recover roughly 10% of the oil in place,” Haustveit said at a recent industry event. “We can repeat the shale revolution with the resource we’ve already characterised, the wells we’ve already drilled, through the infrastructure that’s been built.”
Like Energy Secretary Chris Wright, assistant secretary Haustveit is an industry veteran. As Wood Mackenzie points out, Haustveit, formerly with Devon Energy, had been involved in developing drilling optimization techniques, which makes him a perfect choice for the effort to boost recovery rates—an effort, which the industry is already making.
U.S. oil production topped 13.6 million barrels daily earlier this year. The continued growth came despite a decline in the number of active rigs and despite persistently low international oil prices. It also came despite the fact that, as Energy Intelligence noted in a recent industry report, drilling productivity is deteriorating.
The report cited KeyBanc Capital Markets analysts as reporting drilling productivity declines of between 8% in the Midland Basin to as much as 27% in the Eagle Ford. The analysts called the productivity decline “pervasive” and said it was a result of both field maturation, which is a natural process, and of what the report called efficiency tradeoffs. Specifically, the well productivity decline was attributed to the energy industry’s newfound focus on capital discipline and cost cuts, which, per Energy Intelligence, “means fewer opportunities to chase aggressive growth.”
This is where recovery rate improvement comes in. According to the above report, the industry expects that it will be recovery rates that will drive shale oil production growth over the ten years, replacing faster drilling. Wood Mackenzie said that this year has seen a significant increase in interest in boosting recovery rates. The consultancy noted Exxon’s CEO, who set a target for doubling recovery rates back in 2023.
At a recent presentation, the supermajor provided some details on how it was going on about it: with artificial intelligence used for development planning, extra-long laterals, and improved, lightweight proppants. The latter alone has contributed to Exxon’s expectation of higher overall output this year. Chevron is also zeroing in on higher recovery rates, with Wood Mac citing CEO Mike Wirth as saying recently that “the biggest opportunity is to recover more of the molecules that are in the ground.”
Analysts have been warning that U.S. shale production is about to suffer a reversal of fortunes because of its high costs, compared to conventional oil, as benchmark prices remain stuck in a lower-than-optimal range, pressured by a consistent flow of reports of a glut. Last month, Kpler warned that shale oil production in the United States could see a 700,000-bpd drop by the end of 2026 if the U.S. benchmark falls to $50 per barrel and stays there for long enough. Currently, WTI is trading at below $58 per barrel.
However, it doesn’t necessarily have to be all about output growth, as one senior Wood Mac research noted. “When people in the industry or the government talk about doubling recovery, that does not necessarily mean doubling production rates,” Robert Clarke, VP of upstream research at the consultancy, said. “It’s about how you can sustain production at around its current levels for as long as possible, for as low a cost as possible,” Clarke explained.
Recovery rates and their improvement are going to become even more important for the U.S. energy industry in the coming years, according to Wood Mackenzie. The topic may well shape the next phase of the shale industry’s development, as the consultancy argues it will not be a question of whether oil producers want to spend time and money on it. They will be forced to, for lack of any other areas of performance improvement that could deliver the same results.
