The transformation underway in the U.S. energy sector is being driven by two powerful trends:

• The expanding export of liquefied natural gas (LNG)
• The rapidly growing energy consumption of AI-powered data centers

The ability of the U.S. oil and gas industry to meet future natural gas energy demands over the next decade depends on drilling activity, technological advancements, and investments in infrastructure.

Current State of U.S. Drilling and Production

As of November 2025, the total U.S. rig count stands at 554 active rigs, with 419 oil rigs and roughly 125 gas rigs.¹ The value drivers for each type of rig are summarized in the table below:²

The low, gas-directed rig count is a consequence of E&P operator discipline following years of volatility. Companies prioritize shareholder returns, meaning rigs are only deployed when the Henry Hub price signal is strong enough to guarantee high profitability in dry gas plays (like in the Haynesville and Marcellus gas fields).

The current strength in overall U.S. gas production is largely due to associated gas (gas produced as a byproduct of oil drilling) primarily from the Permian Basin. While this associated gas has buffered the market, it ties the stability of a substantial portion of gas supply to the volatile, oil-driven drilling cycle.

This count has fluctuated in recent years but remains significantly below previous peak levels.

U.S. Rig Count

However, due to substantial gains in drilling efficiency, oil and gas production has not declined at the same rate as rig counts. For example, the Permian Basin saw average oil output per rig surpass 1,300 barrels per day due to longer well laterals and improved completion techniques, boosting per-rig productivity.³

These efficiency gains, powered by innovations such as AI-driven analytics, multi-well completions, and advanced monitoring, have led to a fundamental shift. The historical link between rig count and output has weakened: production can reach all-time highs, even with fewer rigs deployed.⁴

Drilling Outlook to 2035: Capacity and Well Counts

Forecasts suggest U.S. upstream activity will continue to favor efficiency and capital discipline over raw rig count growth. For instance, Wood Mackenzie projects a modest increase in rig demand by roughly 40 units in 2025, primarily for gas plays and areas like the Permian, but not enough to materially change total capacity.⁵

Instead, producers are focused on:

• Deploying longer laterals
• Implementing multi-well pad completions (“simulfrac” or “trimulfrac”)
• Using predictive AI to maximize recovery

While well completion rates have slowed slightly due to lower rig counts and changing economics, productivity gains per well and per rig are expected to compensate for the reduction in physical drilling units.⁶

Meeting LNG Export Demand

The U.S. is now the world’s largest LNG exporter⁷ and continues to expand rapidly. LNG export capacity is projected to nearly double by 2030, rising from just under 12 billion cubic feet per day (bcfd) in 2024 to over 21.5 bcfd by 2030. Multiple new LNG terminals and pipelines are under construction, fueled by nearly $40B in infrastructure investment. Analysts forecast U.S. gas production will rise from 103.6 bcfd in 2023 to around 113.5 bcfd by 2030,⁸ with much of this growth deployed to meet LNG export demand.⁹

In parallel, over 99 bcfd of new pipeline capacity is slated for completion by 2030 to alleviate takeaway constraints and facilitate both LNG exports and industrial use, including data center power.¹⁰

AI Data Centers: The New Power Consumption Giants

U.S. data centers, especially those supporting AI training, are now among the fastest-growing sources of electricity demand.¹¹ By 2035, AI data centers alone are expected to double their share of U.S. power consumption, reaching 9% of total demand.¹² Direct natural gas supply contracts, off-grid power plants, and co-location near major production sites (such as the Permian Basin and Texas) are reshaping how these facilities access energy.

Pipeline operators are ramping up direct feeds to AI hubs, with major projects serving up to 5GW of data center load and new deals tying gas producers directly to AI infrastructure.¹³

Risks and Challenges

Despite optimism, there are genuine concerns:

• Economic Limits and Resource Quality: As drilling moves into less-proven acreage, the marginal breakeven price for shale may rise to $95/bbl by 2035, and well productivity improvements could eventually plateau.¹⁴
• Mature Shale Inventory: The best drilling sites are largely tapped; future growth depends on exploiting more challenging reservoirs with advanced technologies.¹⁵
• Permitting and Infrastructure: Expanding pipelines and LNG export terminals face regulatory, environmental, and social challenges, potentially constraining supply reliability.¹⁶
• Electric Grid Stress: The rising demand from data centers could strain regional grids, requiring parallel investments in transmission and grid upgrades to ensure reliability.¹⁷

Will Enough New Wells Be Drilled?

Yes, if current trends persist. With ongoing investment in drilling efficiency, well productivity enhancements, and continued infrastructure buildout, the U.S. appears poised to meet the increased energy demands for both LNG exports and AI data centers over the next ten years. However, achieving this will require:¹⁸

• Sustained upstream investment, including in new well development and advanced completion techniques¹⁹
• Continued regulatory support and infrastructure expansion to unlock new export capacity²⁰
• Integration of renewable generation and grid modernization to support the reliability needs of data centers and large-scale industrial users²¹

Key Takeaways

The intersection of rising natural gas demand for global LNG exports and surging regional electricity needs from AI data centers creates significant growth opportunities for the U.S. oil and gas sector. Efficiency-led growth, technological innovation, and infrastructure expansion will drive the industry’s ability to meet future energy demands even if raw rig count remains well below historical highs. The key will be sustaining investment in productivity-enhancing technologies and navigating infrastructure and regulatory hurdles as new demand centers emerge and mature.

It is important to remember that the gas exploration industry has ample room to:

• Reactivate warm-stacked rigs
• Re-crew equipment as labor markets loosen
• Deploy more of the high-spec pad-drilling rigs that dominate the shale patch today

In other words, the current rig count is a choice, not a hard constraint. If current trends hold, the U.S. is set to remain a global leader in both LNG exports and powering the digital economy’s energy-hungry AI data centers through the next decade.

WTI Strip Prices Decrease

Spot prices and futures prices for the West Texas Intermediate (WTI) contract decreased approximately $2.50 per barrel in the near term and decreased approximately $1.00 over the longer term.

WTI Strip Prices - One Month Change

As shown, after the expectation of lower near-term pricing, the oil price curve is shifting to a state of “contango,” reflecting the market’s expectation of higher future spot prices over the longer term.

Oil Price Outlook

The price distribution below shows the crude oil spot price on December 15, 2025, as well as the predicted crude oil prices based on options and futures markets. Light blue lines are within one standard deviation (σ) of the mean, and dark blue lines are within two standard deviations.

WTI Crude Oil $/BBL

Based on these current prices, the markets indicate there is a 68% chance oil prices will range from $48.00 and $66.50 per barrel in mid-March 2026. Likewise, there is roughly a 95% chance that prices will be between $34.00 and $84.50. By mid-May 2026, the one-standard deviation (1σ) price range is $46.00 to $69.50 per barrel, and the two-standard deviation (2σ) range is $30.50 to $94.00 per barrel.

Insights

Remember that while option prices and models reflect expected probabilities rather than certain outcomes, they remain a useful tool for assessing market expectations and risk. Throughout most of 2023 and 2024, crude oil spot prices generally fluctuated within the range of $70 to $90 per barrel. During that period, we observed general increases in futures price volatilities as prices approached the upper and lower bounds of that range. In 2025, crude oil spot prices generally remained below that range. For mid-May 2026 pricing as of December 15, 2025, the 1σ range had a spread of $23.50 per barrel, and the 2σ range had a spread of $63.50 per barrel, indicating a general decrease in spreads as prices have begun to stabilize within the range of $60 to $70 per barrel.

1. “US Rig Count” ycharts, webpage; Adreas Exarheas, “North America Drops Rigs Week on Week,” Rigzone, November 20, 2025.
2. “Enverus U.S. Daily Rig Count,” Enverus, webpage.
3. “2025 Trends: How Oil and Gas Operators Are Maximizing Efficiency,” DW Energy Group, news.
4. “U.S. rig counts remain low as production efficiencies improve,” U.S. Energy Information Administration, November 17, 2025.
5. “2025 To See Slight Well Cost Reductions and Modest Rig Count Growth,” The American Oil & Gas Reporter, August 2024.
6. “Assessing the Long-Term Implications of Declining U.S. Oil Rig Counts and the Future of Shale Profitability,” AI Invest, August 30, 2025.
7. Gerald Chew, Lauren Giordano, “Exporting liquefied natural gas (LNG): America’s emerging energy arsenal,” Meketa, September 2025.
8. “U.S. LNG Exports Growth Projected to Surge Through 2030,” Power Info Today.
9. Brian C. Prest, Alan Krupnick, and Jordan Wingenroth, “Unpacking the Department of Energy’s Report on US Liquefied Natural Gas Exports,” Resources for the Future, March 4, 2025.
10. Gerald Chew, Lauren Giordano, “Exporting liquefied natural gas (LNG): America’s emerging energy arsenal,” Meketa, September 2025.
11. Zachary Skidmore, “Welcome to Gas Land - how natural gas is powering the US AI boom,” Data Center Dynamics, May 1, 2025.
12. Josh Saul, Leonardo Nicoletti, Demetrios Pogkas, Dina Bass, and Naureen Malik, “AI Data Centers Are Sending Power Bills Soaring,” Bloomberg, September 29, 2025.
13. Zachary Skidmore, “Welcome to Gas Land - how natural gas is powering the US AI boom,” Data Center Dynamics, May 1, 2025.
14. David Blackmon, “New Report Projects $95 Future Breakeven Price For U.S. Shale Oil,” Forbes, September 28, 2025.
15. “Assessing the Long-Term Implications of Declining U.S. Oil Rig Counts and the Future of Shale Profitability,” AI Invest, August 30, 2025.
16. Simon Flowers, Eugene Kim, Massimo Di Odoardo, and Gavin Thompson, “Could US data centres and AI shake up the global LNG market?,” Wood Mackenzie, May 23, 2024.
17. Helen Kou and Nathalie Limandibhratha, “Power for AI: Easier Said Than Built,” BloombergNEF, April 15, 2025.
18. “U.S. hydrocarbon production supported by export growth in long-term projections,” U.S. Energy Information Administration, July 11, 2025.
19. “2025 Trends: How Oil and Gas Operators Are Maximizing Efficiency,” DW Energy Group, news.
20. “U.S. LNG Exports Growth Projected to Surge Through 2030,” Power Info Today.
21. “U.S. electricity demand outlook 2025: Data centers drive new wave of natural gas generation,” Global LNG Hub, October 22, 2025.