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Commentary Outlook & Notes Market-Relevant Events Infrastructure Supply Chart Pack
The Permian Basin has been operating near the limits of available gas egress capacity for several years, keeping the system structurally constrained. This is expected to change later in 2026, when roughly 4.5 Bcf/d of new outbound pipeline capacity is scheduled to enter service. Economic-driven gas shut-ins have accumulated this spring with low spot prices. Until that capacity comes online, Waha basis is likely to remain stressed. Producers have been aggressive in hedging Waha exposure for 2026 for some time, reflecting limited near-term relief. Further out, materially improved pricing in late 2026 has attracted additional hedging interest, as the Waha forward curve converges toward Henry Hub through the remainder of the decade. The tightening of the Waha–Henry Hub spread reflects growing confidence that incremental pipeline additions will materially reduce the risk of prolonged system congestion.
Commentary
May 8: Waha Fixed price has averaged -$1.84/MMBtu this year through May 7 and just over -$4.00/MMBtu last month. The forward curve remains deeply negative through the summer. The balance of the Summer 2026 strip, June through October, was -$1.75/MMBtu for fixed price as of May 7. U.S. midstream company Kinetik sees higher price-related shut-ins in the Permian. Kinetik revised its full-year 2026 shut-in estimate upward to 220 MMcf/d, out of 1.8 Bcf/d, more than double its previous guidance of 100 MMcf/d. The company said all shut-ins are coming from gas-focused customers, not oil-directed producers. CEO Jamie Welch described the divergence bluntly: “It is a tale of two cities: crude folks that are doing cartwheels and backflips, and those that are localized Waha gas-centric sellers are literally crying poverty.” In another earnings call, there was an important infrastructure update announced by Energy Transfer on its Hugh Brinson Pipeline. The company indicated that the Permian-to-DFW project could begin moving volumes in early 3Q 2026, ahead of its full 1.5 Bcf/d first-phase service date in 4Q. Kinder Morgan’s GCX expansion and the Blackcomb Pipeline are still expected to enter service in 2Q and 4Q 2026, respectively. Lastly, Targa Resources reported Permian shut-ins of up to 400 MMcf/d. Together, Targa and Kinetik account for 620 MMcf/d of gas shut-ins in the Permian due to low spot prices.
May 4: Forward pricing at the Waha hub has continued to decline, extending the weakness that has persisted across West Texas gas markets since the start of 2026. Waha fixed price has fallen to -$5.69/MMBtu for the prompt month, June, as of May 1. Waha basis also moved lower over the past week, settling Friday at -$8.25/MMBtu. For reference, Henry Hub finished the week at $2.78/MMBtu for June. Cash prices in the Permian Basin have rebounded from recent lows to near -$3/MMBtu, with the improvement coming as heavy pipeline maintenance winds down. Interstate deliveries from Permian Highway Pipeline and Gulf Coast Express have increased, allowing more Permian gas to access downstream markets. Additional pipeline capacity is also approaching, with Kinder Morgan’s 570 MMcf/d Gulf Coast Express expansion expected to enter service in 2Q. However, the relief will likely be short-lived, as supply is expected to increase quickly once the additional pipeline space becomes available.
April 24: Waha cash prices have fluctuated between -$6.00/MMBtu and -$8.00/MMBtu over the past week amid pipeline flow restrictions on the Permian Highway Pipeline (PHP). Waha basis and forward curves continue to slide lower. Waha fixed price for May is now -$5.10/MMBtu as of April 23, while Waha basis settled at -$7.72/MMBtu for the same day. Continued weakness wasn’t isolated to cash and the prompt month, as prices weakened across most of the Waha curve. The Summer 2026 basis strip traded about 50c lower over the past week to -$4.93/MMBtu.
April 17: Waha cash prices settled below -$9.50/MMBtu on April 16 – the lowest on record. Waha cash prices fell to record lows this week with shoulder season maintenance taking its toll. Multiple pipelines have been under maintenance throughout the month. El Paso, Transwestern pipelines, contributed to the interstate capacity reductions. Intrastate pipelines are not required to publicly report maintenance events, but historically, April is a busy month for natural gas pipeline maintenance. Forward pricing at Waha isn’t much better looking to producers. Waha basis has fallen to -$6.80 for the May contract and -$4.15 for Waha fixed price. What is more impressive (bad?) is how the Summer 2026 strip (now May-Oct) continues to tumble. The outright price for gas at Waha for the summer strip is -$1.63/MMBtu, another 20c drop from our price update last week. The only egress relief from now until October is Kinder Morgan’s Gulf Coast Express Pipeline expansion of 570 MMcf/d. The expansion is on schedule to enter service in Q2 2026, but maybe don’t get too excited, this will likely fill in a flash.
April 7: Waha cash prices have continued to trade lower over the past week. Since the beginning of the month, Waha has hovered near -$6.00/MMBtu in the cash market. The prompt month is not much better than daily cash weakness. Waha basis for May was near -$6.00 on April 6, while Waha Fixed price (the outright price for May in West Texas) was -$3.16/MMBtu. As mentioned in March, the Summer 2026 strip has continued to trade negative. At -$4.28 for basis and -$1.16 for Waha Fixed price, Waha is exhibiting severe stress. Oil prices are up, and big pipeline relief does not come until November. So far this year, Waha cash prices have been negative 84 out of 97 days. How many more? Probably a lot.
March 27: Extensive selling across the forward curve has weighed on Waha basis prices recently. Prompt prices fell to -$6.16/MMBtu, and the Summer '26 strip is now trading around -$4.10/MMBtu. This would put fixed-price Waha in negative territory for the entire Summer '26 seasonal strip. Basis prices for 2027 onwards, while being significantly higher than 2026, have also trended lower. Winter '27/'28 recently fell to a low of -$1.54/MMBtu. While outbound pipeline capacity is set to expand by a significant amount over the next few years, concerns that future production growth could again test capacity limits may be weighing on prices.
Waha Basis Outlook and Notes
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Summer '26
The Permian’s next major takeaway project doesn’t come online until November of ’26. Waha cash prices in 2026 have been negative for 86% of the days as of early April
Possible overbuild in outbound capacity as Blackcomb, GCX expansion, and Hugh Brinson come into service. The Waha forward curve is the weakest for this time period as the basin likely operates near the limit of egress. Expect bearish pricing in both cash and possiblt the prompt-month if and when pipe maintenance reduces capacity.
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Winter '26-'27 & Summer '27
Both Blackcomb Hugh Brinson will add 4 Bcf/d of new eastbound capacity from the Permian. How quickly these pipelines fill will depend on how much uncommitted gas producers have ready to bring online. It is more realistic that some open capacity will remain after these expansions. The overbuild dynamic extends into 2027. The Waha forward curve reflects this outlook, pricing at a narrower discount to Henry Hub during this period due to the expectation of excess takeaway capacity from the Permian.
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Winter '27-'28 to 2030
The US/Iran war has caused oil prices to soar over $100/Bbl. Forecasts for oil prodcution from the Permian has been rivised higher for '26 and '27. This could carry momentuem into later years depending on the fallout of the war. Rising GORs also support continued strong gas production growth. Roughly 12 Bcf/d of new pipeline capacity is under development to help move gas out of the basin. It is possible the Permian may enter an overbuild phase through the remainder of the decade, easing system constraints and reducing the likelihood of the severely depressed prices observed in 2024 and 2025. One caveat: Producers in the region with whom we speak generally believe operators will ultimately fill all of this new pipeline capacity.
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For more discussion on basis price moves and the current forward curves:
For more discussion and charts, jump to our outlook and chart pack. Remember, the local market is influenced by the broader gas market. Consult our Gas Macro Outlook for more.
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Historical Pricing Regimes
Waha gas has gone through multiple pricing regimes over the past 10 years. Below are a few charts showing these different regimes.
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The histogram above shows how Waha basis settled monthly from 2015 through February 2026. The distribution exhibits a pronounced negative skew, with a long left tail reflecting episodic periods of severe constraint in the Permian.
Notably, the modal outcomes cluster between -$0.25/MMBtu and flat to Henry Hub. In other words, most months historically settled at only a modest discount to Henry Hub despite the extreme downside events that dominate the narrative.
To look a bit deeper in the settlements we can break them down by year on the chart on the right.
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Here we compare Waha fixed price versus Waha basis, showing monthly settlements back to 2015. The years 2015–2017 are highlighted in red to illustrate where most of those -$0.25 to $0.00 basis outcomes occurred.
This period coincided with the collapse in oil prices following the 2014 downturn. West Texas Intermediate plummeted in mid-2014 to below $40/bbl in 2015. The capital pullback was severe. Permian Basin rig counts declined from roughly 566 rigs in late 2014 to just 137 by 2Q 2016.
That contraction in drilling activity materially slowed associated gas growth. With production flattening — and in some areas declining — the natural gas pipeline system in the Permian avoided structural stress. As a result, Waha basis largely hovered near flat to Henry Hub during this stretch.
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The chart above isolates Waha basis monthly settlements since 2023, and the contrast versus the prior decade is stark.
Where 2015–2017 saw clustering around -$0.25 to flat, the post-2023 regime has shifted materially lower. The average discount to Henry Hub is significantly wider, with many monthly settlements centered near -$2.00/MMBtu.
This represents a structural change in the distribution. The 2023–2026 window reflects sustained production growth running ahead of available takeaway capacity.
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Above is the same historical Waha basis chart, but with the period from 2023 through early 2026 highlighted in blue.
The highlighted months visually compress toward the lower end of the distribution, underscoring just how different this regime has been relative to the prior decade. Instead of clustering near flat to -$0.25, settlements repeatedly anchor closer to -$2.00 — with multiple extreme downside events extending well beyond that level.
These blue datapoints reflect a structurally stressed natural gas system in the Permian. Associated gas growth has remained resilient, while incremental pipeline egress has lagged at times. The result has been persistent basis pressure, frequent volatility, and a distribution that is no longer merely negatively skewed — but fundamentally shifted lower.
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Recent Market-Relevant Events
12.22.2025
Energy Transfer to upsize Transwestern pipeline's Desert Southwest expansion project
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8.25.2025
WhiteWater and Partners to announce new 2.5 Bcf/d Permian-to-Katy natural gas pipeline
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8.6.2025
Energy Transfer to Build $5.3 Billion Texas-to-Arizona Gas Pipeline
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The basin suffers from persistent oversupply compared to the amount of egress pipeline capacity. This affects the gas market more than it does crude oil, mostly because of aggressive additions in oil takeaway due to oil’s larger revenue share for almost all operators in the area.
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As of 05/08/2026
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For a discussion of production outlook:
Below are the most market-relevant infrastructure projects that appear to be funded and going forward. The projects that offer intra-region capacity (egress) are also shown in the chart above.
Note: Deeper discussion included below the map.
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Gas Pipeline Projects
Gulf Coast Express (Expansion)
In-service date: 2Q 2026
Capacity: 0.57 Bcf/d
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Source: Kinder Morgan
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Gulf Coast Express Expansion - Kinder Morgan announced the start of an open season for the Gulf Coast Express expansion on May 16, 2022. The project entails adding compressors to the GCX pipeline to enhance its capacity from the Permian Basin to South Texas markets by 570 MMcf/d. The project is expected to be operational mid-2026, subject to additional customer agreements. Kinder's 3Q 2025 earnings call deck showed a 2Q26 in-service date.
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Blackcomb
In-service date: 4Q 2026
Capacity: 2.5 Bcf/d
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Source: WhiteWater
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Blackcomb - WhiteWater Midstream and Targa are moving ahead with building a new 42-inch, 365-mile natural gas pipeline from the Permian Basin in West Texas to the Agua Dulce hub in South Texas. The startup timeline is 2H 2026 and will transport up to 2.5 Bcf/d.Shippers include Devon, Diamondback Energy, Marathon Petroleum, and Targa. Will source in the Midland Basin and the 3 Bcf/d Agua Blanca pipeline system in the Delaware Basin owned by WhiteWater and MPLX.
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Hugh Brinson
In-service date: Q3 2026
Capacity: 1.5 Bcf/d
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Source: Energy Transfer
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| Hugh Brinson - The Hugh Brinson Pipeline Project, formally know as Warrior, will be built in two phases. Phase I consists of roughly 400 miles of 42-inch pipeline running from Waha and the Midland Basin to Maypearl, Texas. The majority of the pipe steel has been secured and is being manufactured in U.S. mills. Phase I is designed for about 1.5 Bcf/d, is fully sold out under long-term, fee-based commitments with investment-grade counterparties, and will use Energy Transfer’s network south of the DFW metroplex to reach major trading hubs and markets. In-service is targeted for Q4 2026. Phase I also includes the Midland Lateral—a 42-mile, 36-inch line that will connect Energy Transfer processing plants in Martin and Midland counties to the mainline. Phase II adds compression, creating a bi-directional system able to move roughly 2.2 Bcf/d from west to east and about 1 Bcf/d from east to west. At start-up, more than 2.2 Bcf/d is expected to be under contract. Total capital for Phases 1 and 2 is estimated at approximately $2.7 billion. Source: ET |
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Hugh Brinson Expansion
In-service date: 1Q 2027
Capacity: 0.7 Bcf/d
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Source: Energy Transfer
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Hugh Brinson Expansion - Phase II adds compression, creating a bi-directional system able to move roughly 2.2 Bcf/d from west to east and about 1 Bcf/d from east to west. At start-up, more than 2.2 Bcf/d is expected to be under contract. Total capital for Phases 1 and 2 is estimated at approximately $2.7 billion. Source: ET
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Energy Transfer Transwestern Desert Southwest Pipeline Expansion Project
In-service date: Q4 2029
Capacity: 2.3 Bcf/d
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Source: Energy Transfer
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| Desert Southwest Pipeline Project - The Desert Southwest Pipeline Project is a 516-mile, newly upsized 48-inch diameter natural gas pipeline that will increase system capacity to up to 2.3 Bcf/d, depending on the final compression configuration. The project is designed to serve strong and growing natural gas demand across the Desert Southwest region. Following the upsizing, total project costs are now estimated at up to approximately $5.6 billion, excluding Allowance for Funds Used During Construction (AFUDC). Energy Transfer continues to target an in-service date in the fourth quarter of 2029. Source: Energy Transfer |
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Eiger Express Pipeline
In-service date: Mid 2028
Capacity: 3.7 Bcf/d
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Source: WhiteWater
Note: Pipe footprint is the same as Matterhorn.
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| Eiger Express Pipeline - The Eiger Express Pipeline is designed to transport up to 3.7 billion cubic feet per day (Bcf/d) of natural gas through approximately 450 miles of 48-inch pipeline from the Permian Basin in West Texas to the Katy area. Supply for the Eiger Express pipeline will be sourced from multiple connections in the Permian Basin, including gas processing facilities in the Midland Basin, and from the Delaware Basin via the Agua Blanca Pipeline, a joint venture between WhiteWater, Enbridge and MPLX. Source: WhiteWater |
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Other Projects
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Kinder Morgan's Copper State Connector (no FID) - The proposed project is a 630-mile, 42-inch greenfield pipeline capable of transporting 2.1 billion cubic feet per day (Bcf/d) from Waha to Arizona. During Kinder Morgan’s Q2 2025 earnings call, company representatives appeared to downplay the initiative when questioned by analysts, citing a competitive environment and uncertainty regarding tariff costs. Click here for the link to Kinder's comments in Docket G-00000A-25-0029 filed in February 2025 with the Arizona Corporation Commission.
Saguaro Pipeline (2028 no FID) - The pipeline is proposed to run from the Waha Gas Hub in the Permian Basin in West Texas, U.S. to the Mexican border in Hudspeth County, Texas. The pipe would be 2.8 Bcf/d at 48" diameter, owned by ONEOK. This pipe's future depends on whether Mexico's Pacific LNG reaches FID (this keeps getting delayed. If this is built, the Permian has more of a chance to be overbuilt with takeaway pipe through 2030.
Northbound Pipeline Expansions
Transwestern - Expansion of 80 MMcf/d. In-service by November 2026.
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Local Supply
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Based on public operator guidance, midstream company outlooks, pricing trends, and recent drilling activity, we anticipate continued growth in both oil and gas production in the Permian Basin, albeit at a slower pace than in the past two years. Historically, Permian gas supply has closely followed available pipeline takeaway capacity, meaning gas is always waiting when infrastructure allows. However, the trajectory of future oil supply growth may be more measured, as operators exhibit greater capital discipline. This moderation in oil production could result in a flatter gas supply growth profile, even with rising gas-to-oil ratios (GOR) and increased drilling in lower-liquids areas.
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Operator Guidance
Diamondback Energy (Q1 2026 EC)
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05/05/2026
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2026 Guidance:
Q1 2026 Total Production: 930-966 Mboe/d
FY 2026 Total Production: Modest growth expected depending on macro and operational factors
2026 CapEx: $3.9B total CapEx, hitting the top end of guidance
Strategic & Infrastructure Highlights
Gas Takeaway Expansion:
Current: ~350 MMcf/d long-haul takeaway commitments; significant WAHA exposure remains
By Q4 2026: ~800 MMcf/d takeaway capacity expected with new pipelines online and greater Gulf Coast pricing exposure
Speficic Pipeline Commitments:
Hugh Brinson: 200 MMcf/d (HSC pricing)
Blackcomb: 250 MMcf/d (Agua Dulce: HH/HSC-linked)
Whistler: 275 MMcf/d
Matterhorn: 75 MMcf/d
Drilling & Basin Activity:
Midland Basin:
Added 2–3 rigs and maintained 5th frac crew
No major DUC build expected; target inventory ~200 DUCs
Drilling costs improved from ~$360/ft to ~$300/ft
Focus remains on high-return oily inventory and capital-efficient growth
Analyst Q&A Takeaways:
Waha Exposure Strategy:
Current: Financial and physical hedges protecting downside; some economic shut-ins (~2–3 Mbo/d equivalent) during extreme negative pricing
2026 strategy: Shift toward physical Gulf Coast gas exposure through new pipeline commitments and diversification away from WAHA
2027-Beyond Strategy: Monetize Permian gas through Gulf Coast pricing exposure, gas-to-power projects, and potential data center demand growth; long-term reduction in WAHA dependency through expanded takeaway infrastructure
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Devon Energy (Q1 2026 EC)
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05/06/2026
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2026 Guidance:
Q1 2026 Production:
Gas: High-GOR Production was curtailed due to weak pricing
Total: Top end of guidance, no specific boe
FY 2026 Production:
Gas: 1,360-1,400 MMcf/d
Total: 835-855 Mboe/d
2026 CapEx:
Q1 Total: $870-$930MM (Upstream $850-$900MM)
FY Total: $3.5-$3.7B (Upstream $3.425-$3.575B)
No Q1 EC update to these totals
Strategic & Infrastructure Highlights:
Coterra Merger:
Expected to close May 2026
1.6 MMboe/d expected production
Acquisitions & Partnerships:
Blackcomb and Hugh Brinson mentioned as part of broader takeaway strategy
Matterhorn equity divestiture (~$409MM; capacity retained)
LNG export deal: 50 MMcf/d (10 years, starts 2028)
In-basin power deal: 65 MMcf/d (7 years, starts 2028)
Drilling & Basin Activity
Delaware Basin:
Delaware Basin remains “crown jewel” asset post-merger
Continued focus on high-GOR optimization and spacing improvements
Ground game added 100+ net locations since last year
Q1 acquisition spend: ~$150MM, ~90% directed to Delaware Basin
Analysts Q&A Takeaways:
Waha Exposure Strategy: Reduce exposure via transport, hedging, and curtailments; Blackcomb lowers it to ~10–15%.
2026 Gas Strategy: Add takeaway, optimize Delaware gas output, and lift realizations.
2027+ Gas Strategy: More Permian takeaway demand; stronger long-term Delaware gas value.
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Kinetik Holdings (Q1 2026 EC)
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05/07/2026
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2026 Guidance:
Capital Program (2026):
$450MM-$510MM (unchanged)
Q1 CapEx: $91MM
Now expecting low- to mid-single-digit % growth YoY
Prior guidance was high single-digit growth
Guidance now assumes ~220 MMcf/d of curtailments in 2026 (vs. prior 100 MMcf/d assumption)
Drilling & Basin Activity:
Permian / Delaware:
Current processed gas volumes approximately 1.8 Bcf/d
Average 2026 curtailments expected at ~220 MMcf/d
Management expects curtailed volumes to begin returning in December 2026
New Mexico:
Large amended contract expanded dedicated acreage by ~25%
~75% of legacy Durango gas processing volumes amended over last four months
Contracts extended through 2039
King's Landing + ECCC:
King’s Landing 1 expected full in 2026
Phase 1 sour gas conversion remains on track for YE26 startup
Total operational TAG capacity expected at 26.5 MMcf/d
Permitted TAG capacity exceeds 31 MMcf/d
ECCC Pipeline expected in-service later this quarter
Strategic & Infrastructure Highlights:
Permian Gas Optimization:
Spread-based marketing gains offset ~170 MMcf/d of Waha-related shut-ins in Q1
~50% of 2026 transport spread exposure hedged
Gas Takeaway & Basis Implications:
Waha daily average price was negative $4.81 in March/April
5 Bcf/d of new takeaway capacity expected online by early 2027
Additional ~6 Bcf/d expected during 2028-2029
LNG / Gulf Coast Exposure:
Additional Gulf Coast transport secured beginning in 2028
INEOS European LNG pricing contract begins in early 2027
Analysts Q&A Takeaways:
2026 shut-ins viewed as temporary; curtailed volumes expected to return in 2027 as takeaway expands
2027 outlook strengthened by higher PDP base, accelerating activity, NGL resets, and King’s Landing sour gas conversion
Waha weakness concentrated among gas-heavy producers; oil-focused activity remains strong
King’s Landing 2 progressing toward FID; company continues pursuing Gulf Coast/LNG exposure and 2027 cost efficiencies
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Energy Transfer (Q1 2026 EC)
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05/05/2026
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2026 Guidance:
2026 Growth Capital:
Guidance raised to $5.5B-$5.9B organic growth capex
Incremental spend focused on:
Permian gathering/compression expansions
Hugh Brinson Pipeline
Desert Southwest Pipeline
Data center & power-related gas infrastructure
Strategic & Infrastructure Highlights
Hugh Brinson Pipeline:
Phase I: 1.5 Bcf/d targeted Q4 2026 in-service
Potential partial flows beginning as early as Q3 2026
Phase II compression expansion targeted Q1 2027
Desert Southwest Expansion:
Capacity upsized to ~2.3 Bcf/d
In-service target: Q4 2029
Management highlighted strong power demand pull from Arizona/New Mexico
Permian Processing Expansions:
Mustang Draw I: 275 MMcf/d commissioning now; full service next month
Mustang Draw II: 275 MMcf/d expected Q4 2026
Permian midstream volumes up 8% YoY
Data Center & Power Demand Growth
Nexus AI campus: initial 150 MMcf/d Texas intrastate demand (YE 26)
Arkansas data center LOI: ~150 MMcf/d (Mid 27)
Oklahoma power plants: ~300 MMcf/d new connections added (More coming 3Q26)
Additional 400 MMcf/d Oklahoma power demand under negotiation
Drilling & Basin Activity:
ET expects ~800 MMcf/d Haynesville volume growth by late 2026
Management said Permian bottlenecks ease materially by late 2026/early 2027 as new infrastructure comes online
ET highlighted substantial idle/system capacity across Permian gas gathering & NGL transport systemsCurrent Permian processing capacity: ~5.4 Bcf/d
Analysts Q&A Takeaways:
Management expects higher U.S. gas demand tied to LNG exports, data centers, and global energy security shifts
ET emphasized strong leverage to Permian gas growth with minimal incremental capital needed across existing systems
Hugh Brinson described as a major future “header system” connecting multiple ET pipelines across Texas
Management sees additional upside from backhaul gas volumes and multi-directional flows across Texas intrastate assets
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Occidental Petroleum (Q1 2026 EC)
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05/06/2026
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2026 Guidance:
Total Production:
~1.44 MMBoe/d (+1% YoY)
Q1 production was 1.426 MMBoe/d
Capital Program (2026):
$5.5-$5.9B (unchanged)
Strategic & Infrastructure Highlights
Permian Gas Optimization:
Midstream outperformed due to gas marketing optimization and wide Waha-to-Gulf Coast spreads
Q1 midstream earnings exceeded guidance by ~$400MM
Gas Takeaway & Basis Implications:
2026 midstream earnings expected to moderate later in the year as Permian gas takeaway capacity increases
Drilling & Basin Activity:
Permian:
~7% lower well costs expected in 2026
Permian unconventional production expected to increase in Q2
Domestic production exceeded midpoint guidance by 33 MBoe/d, driven largely by strong Permian new well and base performance
Analysts Q&A Takeaways:
Permian Gas Transportation Margins Likely to Normalize:
Management expects Waha-to-Gulf Coast spreads to narrow later in 2026 as new pipeline capacity comes online
Macro View (Supply TIghtness 2027+)
Management expects U.S. oil production to plateau between 2027-2030 before declining
Peak supply expected before peak demand
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Local Demand
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The Permian Basin is a supply zone with limited local demand relative to other areas in the US. Local gas demand can range from 400 MMcf/d and 700 MMcf/d depending on the season.
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Wind and Solar Projects: The Permian Basin's sunny climate and high wind speeds make it an attractive location for renewable energy development. This increases competition in the power market and influences grid dynamics.
Infrastructure Limitations: Limited transmission capacity can bottleneck power flows from generation sites (e.g., gas plants or renewables) to demand centers.
Congestion Pricing: Transmission constraints often lead to price volatility and localized pricing spikes.
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Market Design: The Permian Basin straddles the boundaries of the Electric Reliability Council of Texas (ERCOT) and the Southwest Power Pool (SPP), each with different market designs and rules that influence pricing and operations.
Environmental Regulations: Policies targeting emissions and flaring can shift market dynamics by incentivizing renewable energy or penalizing gas flaring.
Data Centers and Electrification: The rise of data centers and electrification of oilfield operations (e.g., electric drilling rigs) also adds to power demand.
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Recent Market-Relevant events
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Energy Transfer to Upsize Desert Southwest Expansion Project
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Market Impact: The addtional capacity on ET's expansion will create additonal egress out of the Permian basin at the end of the decade. The expansion adds to a growing list of pipeline projects aimed at increasing natural gas takeaway capacity out of West Texas and southeastern New Mexico.
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Energy Transfer upsized the pipeline in late 2025 to 2.3 Bcf/d from 1.5 Bcf/d due to customer interest.
- The pipeline will now be a 48" pipe versus the smaller 42" that was orginally planned.
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"The Transwestern Desert Southwest Pipeline expansion will help enable us to meet the region's growing power needs and strengthen Arizona's energy infrastructure" - ET
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The company still expects a Q4 2029 in-service date.
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WhiteWater announces new Permian-to-Katy Natural Gas Pipeline
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Market Impact: The pipeline is likley to follow Matterhorn's easement as the pipeline will be operated by WhiteWater and flows to Katy, Texas. Gas reaching the Katy area will soon have the capability to connect to both Blackfin and Trident that will take gas around Houston toward growing LNG demand.
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The Eiger Express Pipeline is designed to transport up to 2.5 billion cubic feet per day (Bcf/d) of natural gas through approximately 450 miles of 42-inch pipeline from the Permian Basin in West Texas to the Katy area.
- Design capacity of the pipeline is 2.5 Bcf/d and estimated in service date by 1H 2028.
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The Eiger Express Pipeline is a joint venture owned 70% by the Matterhorn JV, 15% by ONEOK, and 15% by MPLX. ONEOK's and MPLX's direct ownership interests in the Eiger Express Pipeline joint venture are incremental to their ownership through the Matterhorn JV, resulting in 25.5% and 22% ownership in the pipeline, respectively.
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The Eiger Express Pipeline will be constructed and operated by WhiteWater and is expected to be in service in mid-2028, pending the receipt of customary regulatory and other approvals.
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Energy Transfer to Build $5.3 Billion Texas-to-Arizona Gas Pipeline
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Market Impact: Would provide more natural gas takeway capacity for the Permian basin. It would also better supply the desert southwest and possibly help feed the Mexican Costa Azul LNG facility.
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The pipeline expansion of Transwestern would consist of 516 miles of 42-inch pipeline and nine compressor stations in Arizona, New Mexico, and Texas.
- Design capacity of the pipeline is 1.5 Bcf/d and estimated in service date by 4Q 2029.
- The project is supported by long-term agreements from invenstment-grade customers and the compay plans to launch an open season later this quarter.
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Tallgrass Proposes new Permian to Rockies Express Pipeline
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Market Impact: The new proposed pipeline could serve a varity of demand centers depending on where it would connect with Rockies Express (REX). Rockies gas production has been on the decline and is expected to continue into the future. Tallgrass has an extensive pipeline system in the Rockies that can reach the West Coast and demand centers in the Midwest.
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Tallgrass anounced anchor shipper precedent agreementsfor a new pipeline that will move gas from the Permian Basin to the Rockies Express Pipeline and other points of delivery.
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The company said there are sufficient agreements to financially justify construction of the project with an in-service date in late 2028.
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WhiteWater Announces FID on Traverse Pipeline
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Market Impact: This pipe is important for moving gas toward the Houston and eventually, toward LNG in Louisiana. However, it does not add extra egress for those exposed to Waha gas prices.
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WhiteWater, MPLX LP, and Enbridge Inc., have partnered with an affiliate of Targa to move forward with the construction of the Traverse Pipeline.
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The Traverse Pipline will be a bi-directional, 160 mile, 36-inch pipeline along the Gulf Coast between Agua Dulce in South Texas and the Katy area.
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The pipeline will transport up to 1.75 Bcf/d and will be sourced from multiple locations such as Whistler, Blackcomb, and Matterhorn Express Pipeline.
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Expansion of NGL and Natural Gas Takeaway From MPLX with Gulf Coast Projects
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Market Impact: Added gas processing and pipeline expansions in the Permian will mean more gas reaching the Gulf to feed LNG growth through the end of the decade.
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MPLX reported a significant uptick in its natural gas and NGL services in late 2024
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New infrastructure includes the Gulf Coast fractionation complex, which will feature two 150 MBbl/d facilities, anticipated to come online by 2028 and 2029
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The company is also working with ONEOK to build a 400 MBbl/d LPG export terminal and pipeline that is expected to come online in 2028
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MPLX also mentioned that the Blackcomb and Rio Bravo Pipelines will enhance natural gas transport from the Permian to the Gulf Coast. The company is also boosting natural gas processing facilities, including the Secretariat processing plant in the Permian. The new facilities are expected to add 1.4 Bcf/d of processing capacity by late 2025.
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Blackfin Pipeline gets approval to build lateral connection to LNG
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Market Impact: A connection between Blackfin and CP Express means Permian gas could flow down Matterhorn—another WhiteWater pipeline—to Blackfin, then to CP Express and CP2 LNG. This, along with Kinder Morgan’s FID-approved Trident Pipeline, would help debottleneck the Katy and Houston area and route gas around Houston to the Beaumont/Port Arthur area.
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The Blackfin Pipeline, owned by WhiteWater Midstream, was approved by the RRC on Jan. 28 for the addition of two laterals, including a 0.55-mile, 48-inch CP Express Delivery Lateral.
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The CP Express Pipeline will deliver gas from far southeast Texas to Venture Global's proposed CP2 LNG project in Cameron Parish, Louisiana.
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The other approved lateral, called the Matterfin Lateral, is 0.2 miles long and would likely link to the Matterhorn Express Pipeline, allowing West Texas gas to connect more easily to Louisiana LNG.
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Blackfin started construction on the mainline in October 2024, according to RRC data.
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Energy Transfer reaches FID on 2.2 Bcf/d Permian pipeline
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Market impact: The addition of the Hugh Brinson pipeline in the winter of '26/'27 will likely add to the region's pipeline takeaway capacity overbuild. The Waha forward curve in 2027 reflects this reality.
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Previously known as the Warrior Pipeline. The pipe has been renamed to Hugh Brinson.
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The project is a 400 miles of 42" pipeline with an initial capacity of 1.5 Bcf/d.
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Phase II will boost pipeline capacity to 2.2 Bcf/d, depending on demand.
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