Citi analysts anticipate the Permian Basin will enter a multi-year growth cycle for natural gas, driven by infrastructure investments and sustained demand from liquefied natural gas (LNG) exports and data center power consumption.
The U.S. shale basin, already the top oil producer, is expected to surpass the Marcellus as the largest natural gas-producing region within the decade. Citi attributes this shift to four recent project announcements, alongside accelerating U.S. LNG export capacity additions, which are projected to ease pricing dislocations at the Waha Hub through 2030.
Permian natural gas production surged from 17.2 billion cubic feet per day (bcf/d) in 2021 to an estimated 27.6 bcf/d by 2025, outpacing pipeline capacity expansion. This imbalance led to persistent pricing dislocations at Waha, with conditions expected to worsen in the first half of 2026 before infrastructure catches up.
U.S. LNG export volumes are forecast to rise materially through 2030, while the power sector’s natural gas consumption is projected to reach a record 46.1 bcf/d in summer 2027, according to the Energy Information Administration’s August 2026 Short-Term Energy Outlook. The Electric Reliability Council of Texas (ERCOT) anticipates a 22% increase in natural gas-fired generation between summer 2025 and summer 2027, primarily due to data center demand growth. Texas regulators’ recent pause on new interconnection approvals prompted the EIA to trim its 2027 estimate.
Citi highlighted Devon Energy’s firm pipeline capacity commitments and partnerships between Diamondback Energy (NASDAQ: FANG), Exxon Mobil (NASDAQ: XOM) with Targa Resources (NASDAQ: TRGP), and Solitude as key enablers of the basin’s expansion. Over the past month, gas-focused exploration and production stocks rose 4.4%, though forward gas strip prices remained flat and prompt-month prices stayed depressed. Citi’s storage supply and demand model indicates actual inventory builds have fallen 1.6 bcf/d below forecasts over the past month.
