The Permian Basin is entering a multi-year growth cycle for natural gas production, with output projected to rise from 17.2 billion cubic feet per day (bcf/d) in 2021 to an estimated 27.6 bcf/d by 2025. The expansion follows years of infrastructure bottlenecks that distorted prices at the Waha Hub, particularly through 2024 and 2025. Recent project announcements and accelerating U.S. liquefied natural gas export capacity are expected to ease price differentials and support oil-focused drilling economics through 2030.
Citi’s inventory model indicates actual gas inventory injections over the past month have lagged forecasts by 1.6 bcf/d, reflecting tighter supply conditions. The bank projects the Permian Basin will surpass other U.S. basins to become the country’s largest natural gas producer, in addition to maintaining its position as the top oil producer. Infrastructure investments are addressing chronic pipeline capacity constraints, which had previously led to price distortions at the Waha Hub.
Demand from the U.S. power sector is also rising, with the Energy Information Administration (EIA) forecasting record consumption of 46.1 bcf/d during the summer of 2027. This represents a 6% increase compared with the summers of 2025 and 2026. Growth in gas-fired power generation in the Electric Reliability Council of Texas (ERCOT) region is expected to accelerate by 22% between the summers of 2025 and 2027, driven by rising electricity demand from data centers and other industrial users.
Exploration and production companies in the Permian have responded by securing firm pipeline capacity through equity stakes and long-term contracts. Notable partnerships include Devon Energy’s involvement with Solitude, Diamondback Energy’s agreements, Exxon Mobil’s collaboration with Targa Resources, and additional initiatives involving other operators. These measures aim to stabilize supply chains and mitigate price volatility as production scales up.
The EIA recently reduced its 2027 gas demand estimate following Texas regulators’ decision to suspend new interconnection approvals earlier this month. Despite this adjustment, the Permian Basin’s gas output is poised to expand significantly, supported by both domestic consumption and export growth.
