Permian Basin Natural Gas Prices Rise Amid Gas Quality Concerns

Natural gas prices in the Permian Basin have risen significantly due to the expansion of pipelines in the region. According to NGI's data, Waha prices averaged around $1.64/MMBtu in July and are currently averaging over $2.00 so far in August.

The added takeaway capacity has allowed supply to connect with demand, but there is a potential new constraint on the horizon for the Permian. Wyoming Interstate Company (WIC) recently posted a critical notice indicating that it had received notices from downstream pipeline operators in the Cheyenne area that WIC was delivering gas with carbon dioxide levels exceeding its 2% by volume tariff specifications.

The issue has been identified at two interconnects with Colorado Interstate Gas (CIG), resulting in the curtailing of flows. Daily scheduled volumes at Bowie fell 27% from 297,522 Dth on August 10 to 217,837 Dth on August 11, before partially recovering to around 273,000 Dth by August 13.

This event is similar to one that occurred in 2025 when Valley Crossing Pipeline indicated cut receipts from the Whistler and Tennessee Gas Pipeline systems due to incoming gas failing to meet their minimum heating value specification. Midstream cryogenic processing infrastructure is expanding to fix Permian gas quality issues, but volume relief from new egress pipelines does not guarantee spec-compliant gas.