Expansion of pipeline capacity in the Permian Basin is set to alleviate a prolonged period of negative natural gas prices.
Natural gas prices in the Permian Basin, the largest U.S. oil-producing region, have been negative for much of the first half of the year due to excess supply and limited pipeline capacity. Producers faced flaring gas or paying to dispose of it as a byproduct of crude oil extraction, highlighting infrastructure constraints.
Pipeline takeaway capacity has failed to keep pace with surging associated gas production from oil wells. The bottleneck has persisted for years, suppressing local prices and forcing operational adjustments by energy companies.
New pipeline projects nearing completion are expected to ease the glut, potentially restoring positive pricing and improving margins for Permian producers.