Citi: Surging Permian Associated Gas to Undermine Long-Term Bullish Case for U.S. Natural Gas Prices
Nashnova编辑部
Citi forecasts the Permian Basin could overtake the Marcellus as the largest U.S. gas-producing region by 2030, with the resulting supply shift undercutting the long-term bull case for natural gas prices.
Where does Permian gas come from — and why is it different?
The Permian Basin spans West Texas and southeastern New Mexico. Its natural gas is mostly associated gas — gas that comes out alongside crude oil, not drilled for on its own.
This means → Permian gas output is driven by oil prices, not gas prices. As long as crude stays profitable, gas keeps flowing regardless.
In plain terms = Marcellus operators drill *for* gas; Permian operators drill for oil and gas tags along — an involuntary byproduct they cannot simply shut off.
Gas prices went negative for four straight months this year — what happened?
Permian crude output kept climbing, flooding the market with associated gas, but takeaway pipeline capacity was already maxed out.
Some producers were forced to shut in wells with high gas-to-oil ratios to stop the bleeding — there was literally nowhere to send the gas.
A wave of new pipeline projects in Texas has now secured financing and is expected to ease the imbalance once built.
What does this mean for other gas-producing regions?
Citi argues Permian supply growth will fill the market gap, so major fields like the Haynesville will not need to ramp up significantly.
This means → The growth ceiling for legacy gas basins drops, and expansion pressure across the supply side shifts onto the Permian.
Won't LNG exports and AI power demand push prices higher?
The bull case rested on two pillars: a wave of new LNG export terminals + massive power demand from AI data centers.
Citi's core call: continued Permian production growth will effectively cushion both demand pressures, undercutting the bull thesis.
In plain terms = demand is rising, but on the supply side there is a tap that cannot be turned off — and it keeps flowing faster. The two forces offset, making a sustained price rally hard to sustain.
How solid is this call — what are the swing factors?
Citi analyst Scott Gruber notes the timeline for the Permian to claim the top spot around 2030 depends partly on where oil prices go.
This reflects a deeper uncertainty: if crude prices drop sharply, associated-gas growth slows too, and the bearish gas-price thesis loses force.
Two key variables: ① the actual path of oil prices and ② the pace of pipeline-bottleneck resolution — together they will determine whether Citi's call holds.
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