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Oil & Gas in 2025: Which Basin Will Dominate U.S. Energy and What’s Behind the $105 Billion in Oil Deals?
02/24/2025
Exxon, Chevron, and Shell Are Betting on Carbon Capture—Is It the Future?
The U.S. oil and gas industry is experiencing one of its most transformative periods. Over the past two years, 2023 and 2024, production levels have soared, investment strategies have shifted, and new regulatory frameworks have emerged.
Now, as we step into 2025, the industry faces critical questions:
- Which basins will see the most growth?
- What are the key companies doing to stay competitive?
- How will new policies impact production and investment strategies?
We analyze major U.S. oil & gas basins, the leading companies, and market trends using the latest data and forecasts.
Key U.S. Oil and Gas Basins: Growth, Challenges, and 2025 Outlook
Permian Basin (Texas & New Mexico) – The Undisputed Leader
2023-2024 Overview
The Permian Basin has remained the most important oil-producing region in the United States, supplying nearly 46% of the nation’s crude oil output in 2024. This vast region, spanning West Texas and southeastern New Mexico, has been at the center of the U.S. shale revolution for more than a decade, and recent years have only solidified its dominance.
- 2023 Production: ~6.0 MMBbl/d.
- 2024 Production: 6.3 MMBbl/d.
Several key factors, including technological advancements in horizontal drilling, infrastructure improvements, and continued investment from major oil players, fueled the Permian's 0.3 MMBbl/d production increase in 2024.
Major Developments Driving Growth in 2023-2024
– Exxon Mobil’s Expansion:
The company’s aggressive acquisition of Pioneer Natural Resources for $59.5 billion in late 2023 further cemented its long-term commitment to the region.
– Chevron’s Efficiency Strategies:
Chevron improved its production output without significantly increasing capital spending. By optimizing well productivity and leveraging enhanced oil recovery techniques, the company maintained steady production growth while maintaining profitability in a volatile price environment.
– Occidental Petroleum & Ecopetrol’s Partnership:
Occidental Petroleum (Oxy) continued to expand its Permian operations through a joint venture with Colombian oil company Ecopetrol. In 2024, Ecopetrol invested $880 million into drilling new wells, with 91 wells planned for completion in 2025. This led to a 62% increase in production over the first nine months of 2024, making it one of the fastest-growing partnerships in the basin.
Infrastructure and Market Adjustments
Infrastructure limitations, particularly in natural gas takeaway capacity, have been a key bottleneck for Permian growth in previous years. However, in late 2024, the Matterhorn Express pipeline came online, adding 2.5 Bcf/d of takeaway capacity. This pipeline has significantly reduced flaring, stabilized natural gas prices at the Waha hub, and enabled higher oil production by ensuring gas associated with oil drilling can be transported efficiently.
2025 Forecast
- Projected Crude Oil Output: 6.6 MMBbl/d, a 0.3 MMBbl/d increase from 2024, continuing the steady growth.
- Natural Gas Production: 25.8 Bcf/d, reflecting the impact of expanded takeaway capacity and rising demand for LNG exports.
- Investment Shift: Companies are transitioning from aggressive drilling to cost-efficient production. With volatile oil prices expected in 2025, capital discipline and maximizing well output efficiency are top priorities.
- Chevron’s Focus: The company expects a 9-10% production increase in 2025, but it will reduce capital spending while improving its efficiency metrics and recovery techniques.
The Permian Basin remains the top destination for U.S. crude oil investments. Still, with the global supply-demand balance shifting, companies are approaching 2025, focusing on profitability rather than reckless expansion.
Gulf of America (Mexico) – Offshore Giant Making a Comeback
2023-2024 Overview
The Gulf of America (Mexico) remains a cornerstone of U.S. offshore oil production, accounting for around 15% of total domestic crude output. While the region's mature fields are declining, new projects are helping stabilize production and extend the Gulf’s viability as a key energy source.
By late 2024, 12 new offshore projects were set to increase production by 0.231 MMBbl/d, helping offset declining output from aging fields.
Major Offshore Developments in 2023-2024
– Shell’s Whale Field: One of the most anticipated deepwater projects, Shell’s Whale Field, is expected to reach peak production of 0.1 MMBbl/d in 2025. This field is notable for its lower cost structure, with Shell implementing more efficient subsea technologies to reduce expenses.
– Beacon Offshore’s Shenandoah Field: This project is another major deepwater initiative, targeting 0.12 MMBbl/d of peak production in 2025. With its ultra-deepwater positioning, it represents one of the most technically challenging but rewarding fields in the Gulf.
– Chevron’s St. Malo Expansion: Chevron continued developing its St. Malo field, aiming to add 175 MMBOE of recoverable oil through enhanced water injection and extended reach drilling.
However, the momentum of these offshore projects faced a temporary setback in late 2024 when OPEC+ delayed planned output increases until April 2025, slowing global offshore investment as producers waited for market conditions to improve.
2025 Forecast
- Projected Crude Oil Output: 1.8 MMBbl/d, maintaining stable levels through 2026.
- Deepwater Projects Driving Growth: New offshore tiebacks and floating production units (FPUs) will help offset natural declines.
- BSEE Regulations: The Bureau of Safety and Environmental Enforcement (BSEE) introduced stricter safety measures for ultra-deepwater drilling, requiring more robust well designs for extreme-pressure reservoirs exceeding 15,000 psi.
Despite rising regulatory scrutiny, the Gulf of America (Mexico) remains an attractive investment destination due to its high-yield wells and long production lifespans. Companies focus on maximizing output from existing infrastructure while integrating low-carbon technology, such as carbon capture and storage (CCS), into offshore operations.
Haynesville (Louisiana & East Texas) – LNG’s Key Driver
2023-2024 Overview
Unlike the Permian Basin, which primarily drives crude oil growth, Haynesville is the primary engine behind U.S. LNG export expansion. Haynesville is critical in feeding natural gas supply to LNG export terminals along the Gulf Coast in Louisiana and East Texas.
- Major Investors: Cheniere Energy, Tellurian, and Venture Global LNG are ramping up production to meet rising global demand.
- Haynesville's Advantage: Proximity to LNG terminals reduces transportation costs, making it one of the most competitive gas plays for global exports.
- Louisiana led the U.S. in LNG infrastructure expansion, with several new projects advancing toward completion in 2025.
- Corpus Christi Stage 3, Plaquemines LNG, LNG Canada, and Costa Azul LNG are set to accelerate operations, further strengthening North America’s position as the world’s top LNG supplier.
However, U.S.-China trade tensions in early 2025 have created uncertainty for long-term LNG contracts, as tariffs and geopolitical concerns affect buying decisions from Chinese companies.
2025 Forecast
- Drilling Activity Expected to Increase as LNG capacity expands.
- Projected Natural Gas Production: Expected the Haynesville region to account for 14% of the U.S. marketed natural gas production in 2025.
- Growing investor confidence in U.S. LNG projects despite global market uncertainties.
The Haynesville Shale is set to play an even larger role in the U.S. energy mix. It will provide a critical natural gas supply for domestic use and growing export markets. As global LNG demand rises, Haynesville is positioned as one of North America's most strategic gas basins.
The Companies Shaping the Future of Oil & Gas
- Exxon Mobil – Shale Leader with Global Ambitions
Exxon Mobil remains one of the world's largest oil and gas producers. To drive growth, it leverages its strong presence in the Permian Basin, offshore Guyana, and the deepwater Gulf of America (Mexico).
Over the past two years, Exxon has consolidated its dominance in the U.S. shale sector, particularly with its acquisition of Pioneer Natural Resources in 2023 for $59.5 billion—one of the largest oil mergers in history. This move significantly increased Exxon's Permian acreage, allowing the company to expand its low-cost production assets.
Key Production Metrics
2023 Production: 3.7 MMBOE/d.
2024: Reached 4.6 MMBOE/d, primarily driven by higher Permian Basin output and offshore Guyana output.
Guyana Contribution: Exxon operates three major oil projects in Guyana, and by late 2024, their combined production will exceed 0.62 MMBbl/d.
Permian Basin Growth: The Pioneer acquisition added 850,000 acres in the Midland Basin, solidifying Exxon’s position as the largest Permian producer.
2025 Strategy and Future Investments
Capital Expenditures: Maintaining $28B–$33B annually for production efficiency, focusing on maximizing existing assets rather than rapid expansion.
Shift to Efficiency-First Strategy: Exxon is transitioning from a growth-at-all-costs model to a cost-conscious strategy emphasizing capital discipline and shareholder returns.
Carbon Capture and Storage (CCS): Exxon is investing heavily in CCS technology as climate regulations tighten. In 2023, it acquired Denbury Inc. for $4.9 billion, strengthening its position as a leader in carbon capture projects.
Expansion into Power Generation: In early 2025, Exxon announced plans to construct natural gas-fired power plants with carbon capture capabilities to supply AI data centers and tech companies. The first projects are expected to be operational by 2028.
- Chevron – Leaning into Efficiency
Chevron has outperformed expectations recently, setting annual production records in 2023 and 2024 across its Permian, Gulf of America (Mexico), and international operations. However, unlike some competitors, Chevron is reducing capital expenditures (CapEx) in 2025, prioritizing efficiency over aggressive expansion.
Key Production Metrics
- 2023-2024: Achieved record-high production, primarily from the Permian Basin and Gulf of America (Mexico).
- 2024 Permian Output: Chevron reported a 14% increase in Permian production despite reducing overall drilling activity.
- Deepwater Investments: Chevron expanded its Jack and St. Malo fields, increasing ultra-deepwater oil recovery in the Gulf.
2025 Focus and Future Strategy
Efficiency in Permian Operations: Chevron aims to boost Permian production by 9-10% while reducing capital expenditures.
Cost Management: The company is shifting towards a cash flow-focused approach, ensuring stable returns for shareholders while limiting risk.
Gulf of America (Mexico) Deepwater Projects: Chevron has reduced its investment in some capital-intensive projects. However, It remains committed to long-term offshore investment in the Gulf, particularly in ultra-deepwater fields.
Carbon Capture & Decarbonization Efforts: Chevron is scaling up CCS investments with new projects in California and the Gulf of America (Mexico) to offset emissions and comply with regulatory shifts.
- ConocoPhillips – Alaska & Permian Heavyweight
ConocoPhillips has positioned itself as a key player in U.S. shale and Arctic oil exploration. With a diversified portfolio in the Permian Basin, Eagle Ford Shale, and Alaskan oil fields, the company's strategy in 2023-2024 focused on acquiring high-margin assets and investing in long-term production stability.
Key Developments
- 2023: Received final approval for the Willow Project in Alaska, securing 750 MMBbl reserves.
- 2024: Expanded its footprint by acquiring Marathon Oil for $17 billion.
- Permian Production Growth: Increased output through long-lateral drilling techniques and optimized well spacing.
2025 Strategy and Outlook
Alaska's Willow Project Development: Construction and drilling will accelerate throughout 2025, with the first production expected in 2026.
Long-Term Shale Investments: The company continues to expand production in high-margin shale plays, particularly in the Permian and Eagle Ford Shale.
LNG Export Expansion: ConocoPhillips has signed long-term LNG supply agreements, positioning itself to capitalize on the global LNG demand surge.
- Shell – Offshore & Deepwater Focus
Shell remains one of the top global players in offshore oil and gas, with a strong presence in the U.S. Gulf of America (Mexico), North Sea, and deepwater assets globally. While the company shifted away from aggressive onshore shale expansion, it focuses on ultra-deepwater drilling and decarbonization strategies.
2023-2024 Offshore Developments
- North Sea Resurgence: In 2024, Shell restarted production at the Penguins field, which is expected to reach 45 MBOE/d at peak output.
- Gulf of America (Mexico) Expansion: Shell ramped up deepwater drilling activity, with new platforms and subsea tiebacks improving recovery rates.
- Carbon Capture & Decarbonization Investments: Shell has committed $10-15 billion in CCS projects between 2023 and the end of 2025.
2025 Growth Areas
Ultra-Deepwater Expansion in the Gulf of America (Mexico): Shell invests in next-generation floating production systems to extract high-pressure oil and gas from ultra-deepwater reservoirs.
CCS and Hydrogen Development: As part of its long-term energy transition plan, Shell is expanding investments in carbon capture, hydrogen, and renewable gas technologies.
Market Trends, Pricing, and Policy Shifts (2024-2025)
Oil and gas policy has shifted considerably over the past two years, with new regulations favoring increased production, expanded drilling, and deregulation in certain areas. These changes are expected to support U.S. energy dominance, particularly in shale production and LNG exports.
Regulatory & Policy Shifts Favoring the Industry
– Expanding Drilling Leases on Public Lands
The U.S. government has resumed large-scale lease sales for oil and gas drilling on federal lands and offshore areas. This move is expected to increase exploration and production activity, particularly in the Permian Basin, Gulf of America (Mexico), and Alaska.
– Lifting of LNG Export Bans
The previous pause on LNG export approvals to non-Free Trade Agreement (FTA) countries has been lifted, significantly benefiting the Haynesville Shale region. This policy shift is expected to boost U.S. LNG exports to key markets like Europe and Asia, further strengthening the U.S. position as the world’s top LNG supplier.
– Repeal of Methane Fees
Initially implemented to penalize excess methane emissions, the methane fee has been repealed. This move eases compliance costs for oil and gas operators, particularly those in shale regions like the Permian, Eagle Ford, and Bakken.
– Regulatory Relief for Carbon Capture & Storage (CCS)
The new administration has introduced incentives for carbon capture and storage (CCS) projects, making it more attractive for oil majors like ExxonMobil, Chevron, and Shell to invest in low-carbon energy solutions while maintaining fossil fuel operations.
New Administration’s Energy Focus
Energy Secretary Chris Wright Confirmed (2025): Wright, a veteran of the shale fracking industry, has been appointed as Energy Secretary, signaling a pro-fossil fuel stance. Wright has publicly supported shale expansion, LNG growth, and reduced regulatory burdens, indicating a favorable environment for oil and gas investment.
Oil Price & Market Dynamics (2024-2025)
2024 Oil Price Trends
Brent Crude Oil Price (2024 Average): $80 per barrel.
WTI (West Texas Intermediate) Price: Averaged $76 per barrel throughout 2024.
Factors Driving 2024 Prices:
- Geopolitical tensions in the Middle East and Russia-Ukraine conflict pushed prices above $85/bbl at times.
- OPEC+ supply cuts kept prices relatively stable despite rising U.S. production.
- Weakening demand from China towards late 2024 put downward pressure on crude prices.
2025 Oil Price Forecast
- Brent Crude (2025 Forecast): $74 per barrel (EIA projection).
- WTI Forecast: Expected to average around $70 per barrel.
- Potential Price Decline: Oversupply concerns may push prices lower, with some analysts projecting a drop to $68-72 per barrel by late 2025.
Market Dynamics Impacting Prices
– U.S. Production Growth Contributing to Oversupply – The U.S. is expected to produce 13.5 MMBbl/d in 2025, further adding to global supply when demand growth slows.
– OPEC+ Cautious on U.S. Production Trends – OPEC+ delayed planned output increases until April 2025 to assess how much additional supply the U.S., Brazil, and Canada would bring to the market.
– Non-OPEC+ Growth (2025 Projection):
- U.S., Brazil, and Canada are expected to add 1.5 MMBbl/d in 2025, putting further pressure on global prices.
- Brazil's offshore pre-salt production is a key driver as Petrobras ramps up new deepwater projects.
- Canada’s oil sands production continues to grow, increasing heavy crude exports to the U.S. Gulf Coast refineries.
Global Supply & Demand Trends
Global Oil Production Forecast (2025): 104.7 MMBbl/d (+1.8 MMBbl/d from 2024).
Global Oil Demand Growth (2025-2026):
- 2025: Expected to grow by 1.3 MMBbl/d.
- 2026: Demand is projected to increase by 1.1 MMBbl/d, primarily driven by Asia-Pacific non-OECD countries.
Key Demand Drivers:
- China’s economic recovery remains uncertain, leading to cautious demand forecasts.
- India’s oil consumption continues rising, with record-breaking fuel demand in 2024-2025.
- European demand remains weak due to higher energy efficiency measures and economic slowdowns.
LNG Market Trends & Expansion
U.S. LNG Exports (2025 Projection): 13.7 Bcf/d (highest on record).
Nearly 90% of the 27 million metric tons of new LNG supply expected in 2025 is anticipated to come from North America, with new projects including:
- Corpus Christi Stage 3 (Texas).
- Plaquemines LNG (Louisiana).
- LNG Canada & Costa Azul LNG (Mexico).
Trade Tensions with China Impacting U.S. LNG Projects:
- As of February 2025, ongoing U.S.-China trade disputes and mutual tariffs have introduced uncertainty for new LNG project developers.
- China has shifted some long-term LNG contracts to Qatari and Australian suppliers, reducing expected U.S. LNG exports to China.
Investment & Strategic Shifts in U.S. Oil & Gas (2023-2025)
Mergers and acquisitions (M&A) in the U.S. upstream oil and gas sector totaled $105 billion in 2024, making it the third-highest annual total in history. However, this represents a sharp decline from $192 billion in 2023, when several record-breaking deals reshaped the industry.
Key Factors Behind the Decline:
- High interest rates and tighter financing conditions limited deal-making in 2024.
- Focus on capital discipline rather than aggressive expansion among shale producers.
- Reduced appetite for mega-mergers after the Exxon-Pioneer and Chevron-Hess deals in 2023.
- Major M&A Deals in 2023-2024
– ExxonMobil’s $59.5 Billion Acquisition of Pioneer Natural Resources (2023)
This was the largest oil and gas M&A deal in nearly a decade, significantly expanding Exxon’s Permian Basin footprint. The deal added 850,000 acres in the Midland Basin, making Exxon the largest Permian producer with over 1.3 MMBbl/d output.
– Chevron’s $53 Billion Acquisition of Hess Corporation (2023)
Hess’ offshore Guyana assets (operated by ExxonMobil) became critical to Chevron’s portfolio. The deal also strengthened Chevron’s shale operations in the Bakken and deepwater Gulf of America (Mexico) projects.
– Occidental Petroleum’s Ongoing M&A Strategy
In 2024, Occidental Petroleum expanded its partnership with Ecopetrol, focusing on Permian and Delaware Basin assets. The $880 million deal aims to drill 91 new wells in 2025, following a 62% production increase in 2024 from existing joint ventures.
– Private Equity Investment in Shale & LNG
Private equity firms, including BlackRock and Apollo Global Management, have increased investment in U.S. natural gas infrastructure, focusing on LNG terminals and pipeline expansions.
Notable projects include investments in Venture Global LNG’s Plaquemines facility and new Gulf Coast LNG terminals.
- ExxonMobil’s Entry into Power Generation (2025 Announcement)
In early 2025, ExxonMobil announced plans to construct natural gas-fired power plants equipped with carbon capture and storage (CCS) technology. These plants will supply electricity to AI data centers and tech companies, addressing the rising demand for low-emission, high-reliability power sources.
- Target Market: The booming AI and cloud computing industry, where power demand is increasing exponentially.
- Projected Timeline: Initial plants are expected to be operational by 2028.
- Technology Integration: Facilities will use CCS to capture up to 90% of emissions, aligning with Exxon’s broader decarbonization strategy.
- Investment Scale: Analysts estimate that Exxon’s power generation venture could involve $10-15 billion in initial investment, depending on the number of plants developed.
This marks a strategic shift for Exxon, signaling its diversification beyond traditional oil and gas production into low-carbon electricity generation.
- Carbon Capture & Storage (CCS) Investment Growth
Major Oil & Gas Companies Scaling CCS Projects
- ExxonMobil, Chevron, and Shell are expanding investments in CCS, aiming to reduce emissions while maintaining oil and gas production.
- Exxon’s Denbury Acquisition ($4.9B - 2023): Strengthened its CO2 pipeline and storage network, making Exxon the largest U.S. CO2 storage operator.
- Chevron’s CCS Expansion: Focused on offshore Gulf of America (Mexico) projects and onshore California CCS hubs.
- Shell’s $10 Billion CCS Commitment: Targeting hydrogen, LNG decarbonization, and industrial CCS projects in the U.S. and Canada.
Conclusion: The Road Ahead
The U.S. oil and gas industry is shifting—from rapid expansion to efficiency-focused growth.
What to Expect in 2025:
§ Permian Basin will continue leading but with a cost-efficient approach.
§ Gulf of America (Mexico) projects will stabilize offshore production.
§ Haynesville Shale will see a rise in drilling due to record LNG demand.
§ Policy shifts will favor increased production, but market risks remain.
Will oil prices stay above $70?
Can U.S. LNG exports hit new highs?
How will deepwater drilling evolve?
2025 is shaping up to be a defining year for U.S. energy.
Article Tags
Chevron
ConocoPhillips
Exxon Mobil
Hess
LNG
Occidental Petroleum
OXY
Pioneer Natural Resources
Shell
ConocoPhillips
Exxon Mobil
Hess
LNG
Occidental Petroleum
OXY
Pioneer Natural Resources
Shell
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