New Pipeline Capacity Unlocks Supply Potential for Permian Natural Gas

Monday, 07/20/2026  Published by: Lindsay Schneider  rbnenergy.com

Excerpt.

Natural gas prices in the Permian spent the first half of the year in the red. Between the beginning of the year and mid-June, cash prices in the basin were above zero only 11 days, most of them during an extreme cold snap in January that caused production freeze-offs. Then, in mid-June, someone — well, Kinder Morgan, to be specific — flipped a switch and now Waha prices are once again in positive territory. The “switch” was a compression expansion on Gulf Coast Express (GCX), which added a desperately needed 570 MMcf/d of takeaway capacity. As we discuss in today’s RBN blog, the pace of Permian production growth and the timing of two greenfield pipelines that will come online later this year will help determine where Waha prices go from here.

Located in West Texas and southeastern New Mexico, the Permian produces massive volumes of gas, but there’s almost no local market, so nearly all the gas produced in the basin must go elsewhere for consumption. As production has grown, the region has, time and time again, outgrown the pipeline capacity available to transport that gas, leading to extremely negative prices — and some extremely long, abysmal stretches. So, if producers must pay to haul their gas away, why don’t they just stop and shut-in wells?

We see that behavior elsewhere, like in Appalachia, where producers will curtail production when gas prices get too low (forget about below zero), but that isn’t really in the Permian producer playbook for one reason: The Permian is an oil play that happens to produce gas, not a gas play. All the gas production (around 22 Bcf/d of it currently) is associated with oil production, meaning producers are making their decisions on oil economics. Furthermore, many producers have firm transport out of the basin, so they aren’t realizing those negative prices. It’s often the smaller guys that run into problems, which has also helped drive consolidation in the basin (see Money Can Buy It). Multiple times over the past seven or so years, the basin has “run out” of pipeline takeaway capacity, and oftentimes producers wait until it's already bad before committing to a new pipeline.

The last new pipeline to come online in the basin was WhiteWater Midstream’s Matterhorn Express, which began service in October 2024. WhiteWater, EnLink Midstream (now part of ONEOK), Devon Energy and MPLX reached a final investment decision (FID) on the 2.5-Bcf/d pipeline in May 2022, but toward the end of construction it became clear that wouldn’t be enough, even in the medium term. Cash prices dropped after the winter of 2024-25, then dipped back below zero in September 2025. But by that point, producers in the basin had already committed to huge amounts of new takeaway capacity. 

Also in October 2024, Kinder Morgan announced it would move forward with the 570-MMcf/d expansion of its 2-Bcf/d GCX pipeline. The pipeline began service in 2019 and was the only greenfield pipeline built in the previous seven years that had not already been expanded via compression. As we said, the expansion began service in mid-June.

Startup progress on intrastate pipeline projects is much more difficult to track than on interstate pipelines, as intrastate pipelines have far fewer reporting requirements than their state-line-crossing counterparts. They don’t report any flow data, and often companies don’t even announce that a project has come online until well after the fact. What first clued us into the expansion’s startup were two new connection points on interstate pipelines that began reporting data shortly before Waha cash prices rebounded. 

The points are being reported by Tennessee Gas Pipeline and Natural Gas Pipeline of America in Nueces County, TX, where the Agua Dulce Hub is located. Flows to TGP at Agua Dulce have averaged around 150 MMcf/d and have been as high as 200 MMcf/d since the expansion ramped online in mid-June. Although the two new reporting points don’t account for the project's full capacity, actual flows are likely higher, with the remaining gas connecting to other intrastate pipelines in the Agua Dulce area.

For right now, the expansion has been enough to provide some relief for the basin and prices have recovered and stayed above zero. But considering the basin’s production and pace of growth, 570 MMcf/d is not a ton of capacity, and new production could easily outpace it and push prices back below zero. However, even if prices dip again, the move would very likely be short-lived, as two more major expansions will add 4 Bcf/d of capacity later this year.

WhiteWater Midstream and Targa Resources’ 2.5-Bcf/d Blackcomb Pipeline, which took FID in the summer of 2024, is slated to begin service in Q3 of this year — in other words, soon. (There are no indications that it is already online.) The pipeline is 70% owned by WPC Joint Venture, a partnership with WhiteWater, MPLX and Enbridge; 17.5% by Targa; and 12.5% by MPLX in addition to its WPC-related ownership interest. The new pipeline will run from West Texas to the Agua Dulce Hub in South Texas, parallel to Whitewater’s Whistler Pipeline. 

Energy Transfer’s Hugh Brinson Pipeline will likely be online soon. The company recently filed with regulators to set rates and operating terms for Phase 1. There have even been some unconfirmed reports of early startup activity on the pipeline. The pipeline will begin with an initial capacity of 1.5 Bcf/d (Phase 1), but a compression expansion (Phase 2) was greenlit shortly after the project’s original FID — that additional 0.7 Bcf/d of capacity is due online in 2027.

So the Permian has an additional 4 Bcf/d of takeaway capacity still coming this year and another 0.7 Bcf/d in 2027, but there is even more planned for later this decade that should keep the basin constraint-free for some time. Energy Transfer will expand its Transwestern Pipeline by 2.3 Bcf/d with the Desert Southwest project. This pipeline brings gas west from the Permian to the Arizona and California markets. The project is due online in late 2029 and is currently the only Permian expansion not targeting Gulf Coast markets, although there are other proposals on the table.

WhiteWater and its partners will build the Eiger Express Pipeline, which will bring Permian gas to the Katy Hub near Houston. The pipeline was originally slated to be 2.5 Bcf/d but it was upsized to a whopping 3.7 Bcf/d a few months after its FID. Eiger Express will begin service in 2028 and ramp up to full capacity in 2029. The project is 70% owned by the same joint venture (JV) that owns Matterhorn Express: WhiteWater (with a 65% stake in the JV), ONEOK (15%), MPLX (10%) and Enbridge (10%); the other 30% of Eiger Express is held directly by ONEOK (15%) and MPLX (15%).

That’s a whopping 11.27 Bcf/d of new pipeline takeaway capacity that either just started up or will be coming online by the end of the decade. It will take time to grow into all that new capacity and RBN does not anticipate production to reach a level high enough to re-constrain the basin until the late 2030s. In the meantime, Waha producers should be able to realize higher prices for their gas. But that doesn’t mean we’ve seen the last pipeline announcement; the constraint is just pushing east. The overwhelming majority of this incremental gas is headed to the Gulf Coast to serve rising LNG export demand, which also requires its own set of new pipeline projects to facilitate that growth.