Crude Pipeline Bottleneck Constrains Permian Gas Growth

The Permian Basin's growth is being constrained by limited crude oil pipeline capacity, not gas pipeline expansion. New gas pipelines have improved Waha hub prices and bolstered drilling economics for producers in the region. However, East Daley Analytics found that crude oil pipelines are nearly fully utilized, with 99.7% of Corpus Christi-bound pipelines and 91.7% of Houston-bound pipelines used to capacity.

The growth of Permian gas production is being hindered by the lack of crude oil pipeline infrastructure. According to East Daley Analytics' Production Scenario Tool (PST), if the number of rigs in the Permian Basin increases, crude oil production will increase at a faster rate than gas production, putting pressure on the limited takeaway capacity.

The scarcity of crude oil pipelines is already affecting producers, with some opting to shut-in wells due to negative prices. The situation may improve in 4Q26 with the start of new pipeline expansions, but it's unlikely to alleviate the constraint entirely.