Wood Mackenzie Sees Henry Hub Gas Prices Climbing Toward $5 by 2035
The decade of cheap U.S. natural gas is winding down, World Oil reports, citing a new Wood Mackenzie forecast that puts Henry Hub prices near $5/MMBtu (real) by 2035.
Market Impact
That figure marks a sharp break from the $2 to $4/MMBtu range that has largely held for the past ten years. Wood Mackenzie attributes the shift to three converging forces: sustained growth in LNG exports, rising gas-fired power demand tied to AI data centers, and slowing productivity gains in mature U.S. gas plays.
“The conditions that kept Henry Hub between $2 to $4/MMBtu for the best part of a decade are no longer all operating at full force,” said Kristy Kramer, head of LNG Strategy and Market Development at Wood Mackenzie. “Power sector demand alone is calling for an additional 17 Bcfd by the mid-2030s, and the highest-quality acreage is already in production.”
The firm expects U.S. LNG export capacity to more than double, positioning the country to supply over one-third of global LNG volumes by the early 2030s. On the supply side, producers have already tapped much of the top-tier acreage in the Marcellus, Haynesville and Permian basins, pushing development costs higher. Dulles Wang, director of Americas Gas and LNG Research at Wood Mackenzie, noted that associated gas, which drove roughly half of U.S. gas supply growth over the past decade at near-zero marginal cost, is expected to fall below 20% of supply growth over the next ten years. Wood Mackenzie describes the overall change as a structural shift in Henry Hub pricing, from a market shaped by abundant supply to one increasingly driven by demand.
What It Means for Subcontractors
- Gas processing and pipeline construction backlogs tied to LNG export buildout (already sized to more than double U.S. export capacity) will likely keep growing through the early 2030s, favoring E&I, welding and pipefitting crews that can commit to multi-year schedules.
- With Wood Mackenzie citing 17 Bcfd in added power-sector gas demand by the mid-2030s, contractors serving gas-fired generation and compression projects should start pricing long-term material and labor contracts now, before rising Henry Hub prices push input costs higher.
- Producers working the Marcellus, Haynesville and Permian, where Wood Mackenzie says the best acreage is already developed, may need more workover, artificial lift and midstream tie-in work to offset slowing productivity, a potential opening for smaller service firms in those basins.
- Firms negotiating long-term subcontract rates with upstream operators or LNG developers should factor in Wood Mackenzie’s forecast of sustained price growth through 2035 rather than assuming a return to the $2-$4/MMBtu range seen over the past decade.
