Citi Predicts Multi-Year Natural Gas Growth in Permian Basin
Citi analysts predict that the Permian Basin is entering a multi-year expansion phase for natural gas infrastructure, which could alleviate long-standing takeaway constraints. This growth cycle differs from previous ones due to more durable demand sources such as U.S. LNG exports and electricity needs driven by AI data centers. The bank forecasts the basin will eventually become the largest natural gas-producing region in the U.S., adding to its current status as a top oil producer. Citi identified four recently announced projects as pivotal for improving Permian's gas market, alongside existing capacity additions and rising LNG exports. These developments are expected to reduce price differentials at the Waha Hub and support drilling economics through 2030 by easing transportation of associated natural gas. Gas production in the basin has grown significantly from 17.2 bcf/d in 2021 to an estimated 27.6 bcf/d in 2025, but pipeline development lagged behind. U.S. LNG exports and increased power sector demand are expected to drive natural gas consumption higher by the end of this decade. However, Texas regulators recently paused new interconnections, prompting a downward revision for 2027 forecasts. Citi also notes that Permian producers may increasingly secure pipeline capacity through equity ownership or long-term contracts.
Topics: LNG exports natural gas production Permian Basin pipeline infrastructure