Key facts
- Permian natural gas prices averaged -$2.19 per MMBtu in the first half of 2026 due to pipeline constraints.
- The Waha hub price reached a low of -$7.95 per MMBtu in April.
- New pipeline projects, including the GCX expansion and Hugh Brinson Pipeline, have started operation.
- These new pipelines are designed to move Permian gas to East Texas, Katy Hub, and Gulf Coast markets.
- Producers are bringing back curtailed volumes as new pipeline capacity comes online.
- Over 66% of new U.S. natural gas pipeline capacity planned for 2026-2027 originates in Texas.
Natural gas produced in the Permian Basin, the top U.S. oil field, experienced negative prices for much of the first half of the year due to a lack of pipeline capacity to transport the rising volume of associated gas from oil-targeting wells. Producers were forced to either flare the gas or pay for its disposal. This constraint has persisted for years as gas production outpaced pipeline expansion.
The Waha hub, the regional pricing benchmark, averaged -$2.19 per million British thermal units (MMBtu) in the first half of 2026, with a record low of -$7.95 in April, significantly below the national Henry Hub benchmark. However, the situation began to improve in June with the startup of the Gulf Coast Express Pipeline expansion and Energy Transfer's new Hugh Brinson Pipeline. These projects are designed to move Permian gas east to markets in East Texas, the Katy Hub, and the Gulf Coast, including LNG export facilities.
Analysts report that producers who had curtailed volumes are now bringing them back online as new capacity becomes available. While the immediate congestion is easing, Permian-focused operators acknowledge that it will take several quarters for constraints to fully disappear. A potential new bottleneck could emerge if sustained high oil prices encourage increased drilling in the Permian, leading to even higher associated gas production.
Pipeline developers plan to add substantial new natural gas pipeline capacity in the U.S. in 2026 and 2027, with over 66% of this new capacity originating in Texas. These projects are expected to alleviate bottlenecks at the Waha Hub. Despite these developments, executives in the Permian Basin view gas takeaway capacity as the most significant constraint on their drilling activity in the next 12 months, with most expecting full resolution by 2027, though some anticipate delays until 2028 or beyond.