Permian Pipeline Expansion Critical to Stabilize Natural Gas Markets
The Permian Basin continues to be the driving force behind U.S. oil production, but it is becoming increasingly gassy. Rising gas-to-oil ratios (GORs) mean that every new barrel of crude oil produced also brings more associated natural gas. Without sufficient takeaway capacity, this excess gas depresses local prices, forces production curtailments or flaring, and undermines the economic viability of oil drilling.
New pipelines are essential to address this issue, connecting Permian supply to Gulf Coast LNG, industrial demand, and power markets. These pipelines support both short-term producer netbacks and long-term U.S. gas system balance. Industry experts, including Steve Reese of Reese Energy Consulting, are set to discuss whether current growth is sustainable and the risks of over-reliance on natural gas for the U.S. grid.
In 2024, the Permian accounted for most of the U.S. associated-gas growth, reaching about 12.5 Bcf/d and 47 percent of the region’s total gas. Maturing wells and a shift toward gassier Delaware Basin targets reinforced this trend. U.S. gross withdrawals hit a record 137 Bcf/d in July 2026, with Texas and New Mexico contributing the largest gains. The EIA projects further Permian gas growth of 1.7 Bcf/d in 2026 and 2.2 Bcf/d in 2027, outpacing oil production due to rising GORs.
When production outpaces pipeline capacity, the Waha hub price collapses. In 2024, Waha averaged only about $0.17/MMBtu and traded negative on more than a third of days. Spring 2026 maintenance worsened the problem, with prices staying negative for extended periods, bottoming near, $9 to, $10/MMBtu. Producers with firm transport could still realize better netbacks downstream, while others shut in wells, curtailed volumes, or flared gas. East Daley Analytics estimated basin-wide flaring near 1.7 Bcf/d in the first half of 2026.
Recent pipeline projects like Kinder Morgan’s Gulf Coast Express expansion and Energy Transfer’s Hugh Brinson helped stabilize prices, but the structural need for more capacity remains. Additional projects, including Blackcomb, Eiger Express, and Energy Transfer’s Desert Southwest expansion, aim to address this gap. Analysts at RBN Energy and East Daley note that these projects could add up to 10 Bcf/d or more of Permian takeaway by the end of the decade.
Natural gas remains crucial for grid stability, supporting power-sector demand and LNG exports. However, overbuild risk exists if oil activity slows sharply. FERC’s recent reforms aim to accelerate energy infrastructure decisions, but further reforms are needed to match the pace of Permian supply and data-center demand. New Permian takeaway is essential to convert the gassier oil basin into stable, marketable supply and support the U.S. gas system.