Permian Basin Natural Gas Prices Have Been Negative for Over Half of This Year
Natural gas prices in the Permian Basin have been negative—meaning producers pay others to take their product—for 118 days this year, highlighting a persistent oversupply issue. Despite record production levels and rising oil prices that encouraged continued drilling, there is insufficient pipeline capacity to transport all of the natural gas produced alongside crude oil. As a result, operators are forced to either shut in profitable oil wells or pay for disposal. Chevron's subsidiary Energy Forge One has signed an agreement with Microsoft to build a 20-year power plant near Pecos, Texas, which will use local natural gas directly without relying on the public grid. This project is part of a growing trend where data centers are becoming key consumers in West Texas by burning stranded gas for electricity generation. Analysts suggest that these behind-the-meter projects may influence producers to drill more gassy wells intentionally, as infrastructure was largely built around crude oil transport.
Topics: Chevron energy infrastructure Microsoft partnership natural gas prices Permian Basin