LNG buildout leaves room for both Permian, Haynesville

argusmedia.com  20/10/25  By Tray Swanson

Growth in natural gas supplies in both the Permian and Haynesville shale basins will be needed to satisfy rising LNG exports in Texas and Louisiana through the end of the decade, industry speakers told a conference last week.

Higher LNG feedgas demand is expected to raise prices and incentivize drilling. The US has about 17.5 Bcf/d of liquefaction capacity, with another 15 Bcf/d under construction. Due to limited takeaway capacity from Appalachia, the biggest gas-producing region in the US, LNG terminals will need to draw from production in the Permian basin of west Texas and New Mexico as well as the Haynesville, which straddles north Louisiana and east Texas, industry speakers said at the Gulf Coast Energy Forum in New Orleans, Louisiana, last week.

The US Energy Information Administration (EIA) forecasts gas production in the Permian to climb to 27.7 Bcf/d this year and to 28 Bcf/d in 2026, though rising crude production has flooded the regional market with associated gas faster than new pipeline capacity can enter service. The EIA expects Haynesville production to reach 15.2 Bcf/d this year and 15.6 Bcf/d in 2026.

"Permian and Haynesville gas-on-gas competition is real, but only to a point," Expand Energy chief executive Nick Dell'Osso said.

Dell'Osso cited several bottlenecks that will cap the amount of Permian gas available to LNG terminals in Louisiana, with one chokepoint at the Katy hub west of Houston.This would call on higher output in the Haynesville to meet growing LNG demand.

Currently, less than 3 Bcf/d of pipeline capacity runs from Katy to the Gillis hub north of Lake Charles, Louisiana, a key supply corridor for LNG terminals. But midstream firms have plans to boost flows by the end of the decade. WhiteWater's Blackfin Pipeline, Kinder Morgan's Trident and the recently sanctioned Mustang Express would combine to add 8 Bcf/d of capacity from Katy to the LNG corridor near the Texas-Louisiana border.

The Katy bottleneck adds to an initial chokepoint at the Waha hub in west Texas, where midstream firms are adding about 6.6 Bcf/d of takeaway capacity in 2026. With limited egress, spot prices at Waha have been sensitive to pipeline maintenance, recently plunging to -$8.44/mn Btu.

Producers have multiple ways to bring more Permian gas to the market when prices are positive, said James Pearson, senior market analyst at ConocoPhillips. Because Texas allows flaring only in certain conditions, producers inject more gas into conventional reservoirs when prices are negative, Pearson said. But that gas can be brought to market when prices support it.

"We anticipate that as you get even slightly positive prices, we see more gas come on line," he said.

Swing supply in the Haynesville

Elevated Henry Hub prices could open up more areas for drilling in the Haynesville, where breakeven costs are around $3.50/mn Btu.

"The difference between the supply that's available to drill economically at $3 versus $4 is huge, and then the difference between what's available to drill economically between $4 and $4.50 is probably just as large," Dell'Osso said.

Producers in the Permian and the Haynesville benefit from being in states that can connect to growing demand centers with intrastate pipelines, which have significantly fewer regulatory hurdles to clear than interstate lines.

"Basically, anything that's within 500 miles of an LNG facility is going to have to get drilled over the next 15 years," said Derek Gillespie, senior director of business development at DT Midstream.

DT's LEAP pipeline will offer 2.1 Bcf/d of capacity from the Haynesville to Gills when the fourth phase of the pipeline comes on line in early 2026, with room for up to 4 Bcf/d of expansion, Gillespie said. Southbound capacity from Haynesville is currently around 9.5 Bcf/d.