New Pipeline Capacity Lifts Permian Gas Prices Out of Negative Territory
Waha hub natural gas prices in the Permian Basin have turned positive after averaging deeply negative for most of the first half of 2026, OilPrice.com reports, as new pipeline capacity begins easing a persistent takeaway bottleneck.
Market Impact
The Waha spot price, the regional benchmark tied to Midland-area gas production, averaged -$2.19 per MMBtu in the first half of 2026 and hit a record low of -$7.95 per MMBtu at the end of April, more than $10 below the Henry Hub national benchmark at the time. Producers had been forced to flare gas or pay to offload it as associated gas volumes from oil-directed drilling outpaced pipeline capacity.
That changed in June, when Waha prices turned positive and have held above zero for more than a month, according to OilPrice.com. The turnaround followed the startup of the Gulf Coast Express Pipeline expansion and Energy Transfer’s new Hugh Brinson Pipeline, though Hugh Brinson won’t reach full capacity until March 2027. East Daley Analytics noted the route is designed to move Permian and Midland Basin gas east to East Texas, the Katy Hub, and Gulf Coast demand markets including LNG export terminals, power plants, storage, and industrial customers. Aegis Hedging said producers who had curtailed volumes through shut-ins or flaring have started bringing that gas back online.
EIA data cited in the report shows 44.9 Bcf/d of new U.S. natural gas pipeline capacity is set to come online in 2026 and 2027, with 29.7 Bcf/d, or more than 66%, originating in Texas. The Hugh Brinson Pipeline, Rio Bravo Pipeline Project, and Blackcomb Pipeline are the three largest Texas gas pipelines expected to enter service by year-end. Still, the June Dallas Fed Energy Survey found most Permian-focused executives view gas takeaway capacity as the biggest constraint on drilling activity over the next 12 months. First quarter 2027 was the most common answer for full resolution, picked by 25% of respondents, while more than 10% expect bottlenecks to persist into 2028 and about 7% said “never.”
What It Means for Subcontractors
- Pipeline construction crews, welders, and HDD contractors working Texas gas takeaway projects should expect continued demand through 2027, with Hugh Brinson not reaching full capacity until March 2027 and Rio Bravo and Blackcomb both targeted for in-service by the end of 2026.
- E&I and mechanical contractors serving Permian producers may see renewed activity at wellsites if sustained high crude prices push operators to drill more, since associated gas output rises alongside oil-directed drilling and could strain the new capacity again.
- Field service firms tied to flaring mitigation, gas gathering, and compression should track the Dallas Fed Energy Survey findings: a quarter of Permian executives expect constraints resolved by Q1 2027, but plan for slower-moving contracts if bottlenecks extend into 2028 as some respondents indicated.
- Contractors bidding on Gulf Coast demand-side infrastructure, including LNG export facilities, power plants, and storage assets along the new pipeline routes to East Texas and the Katy Hub, should monitor capacity build-out schedules tied to GCX expansion and Hugh Brinson startup for downstream project timing.
