Permian Gas Growth Hinges on Crude Pipeline Capacity

The Permian Basin's gas production is expected to see significant growth in the coming years, but a potential bottleneck could arise from the region's limited crude oil pipeline capacity.

A recent report by East Daley Analytics found that Waha hub prices have risen dramatically since June, reaching around $1.80/MMBtu due to the startup of new Permian gas pipeline expansions such as Kinder Morgan's Gulf Coast Express Pipeline and Energy Transfer's Hugh Brinson line.

The added capacity is expected to continue growing in 4Q26 with the start of Blackcomb Pipeline and further construction on Hugh Brinson, followed by Eiger Express in mid-2028. However, East Daley's analysis suggests that even a modest increase in crude oil production could put pressure on Permian takeaway infrastructure.

The report used East Daley Analytics' Production Scenario Tool to forecast a high-growth scenario where the Permian rig count increases by 35 and 20 rigs in the Delaware and Midland basins, respectively. Under this scenario, residue gas production grows by 22.2% (~5 Bcf/d) while crude production increases by 13.5% (934 Mb/d).