US natgas prices at Waha Hub in Texas in negative territory for record 12th day

By Scott DiSavino

NEW YORK, Feb 23 (Reuters) - U.S. spot natural gas prices for Monday at the Waha Hub in the Permian Shale in West Texas closed in negative territory for a record 12th time in a row as pipeline constraints trap gas in the nation's biggest oil-producing basin, forcing some energy firms to pay others to take gas associated with their oil production.

Analysts have long said negative prices were a sure sign the Permian region, which spans West Texas and eastern New Mexico, needs more gas pipes. More pipes are on the way later this year, but just not soon enough to handle all the gas currently coming out of the ground in the basin.

Permian gas production has hit record highs every year since 2013, rising to an average of 27.6 billion cubic feet per day (bcfd) in 2025 - enough to supply about a quarter of U.S. demand. The U.S. Energy Information Administration (EIA) projected Permian production will rise to 29.0 bcfd in 2026 and 29.6 bcfd in 2027.

Over the past five years (2021-2025), output in the basin has soared by an average of around 12% a year, making the Permian the fastest-growing and second-biggest gas-producing shale basin in the country behind the Marcellus/Utica Shale in Appalachia in Pennsylvania, Ohio and West Virginia.

But that growth is expected to slow over the next couple of years, down to an average of around 4% a year in 2026 and 2027, according to EIA forecasts.

"The Permian region is waiting on new pipeline capacity before growth can resume. We expect Permian gas production to increase in (the second half of 2026) with the addition of new pipeline capacity," analysts at Bank of America said in a note last week.

NEW PIPES TO THE RESCUE

Kinder Morgan KMI.N expects its roughly $455 million Gulf Coast Express expansion to enter service in the middle of 2026, increasing the capacity of the existing 2.0-bcfd pipe by around 0.57 bcfd.

One billion cubic feet of gas is enough to supply about 5 million U.S. homes for a day.

Another pipe under construction and expected to enter service in mid 2026 is the 2.5-bcfd Blackcomb project being built by privately held infrastructure company WhiteWater for the WPC Joint Venture and units of Targa Resources TRGP.N and MPLX MPLX.N. WPC is a joint venture between units of WhiteWater, MPLX and Enbridge ENB.TO.

Once in service, Blackcomb will move gas produced by several firms, including Devon Energy DVN.N, Diamondback Energy FANG.O, Marathon Petroleum MPC.N, Targa Resources, and others from the Permian to the Agua Dulce area in South Texas.

Later this year, Energy Transfer ET.N expects the first 1.5-bcfd phase of its roughly $2.7 billion Hugh Brinson pipe from the Permian to the Dallas-Fort Worth area to enter service in the fourth quarter of 2026, with the 0.7-bcfd phase 2 following in the first quarter of 2027.

NEGATIVE PRICES

Energy firms in the Permian have been willing to take some losses on gas because they can make up for those with profits from selling oil. Negative gas prices were not very common a decade ago when environmental rules were less strict and many drillers could flare or burn off some of their unwanted gas.

But in recent years, that gas has become increasingly valuable as a fuel to generate electricity used by power-hungry U.S. data centers and for export via pipeline to Mexico and as liquefied natural gas (LNG) to markets around the world.

In the cash market, average prices at the Waha Hub NG-WAH-WTX-SNL fell to minus $4.56 per million British thermal units (mmBtu) for Monday, down from a negative $2.16 for Friday.

That was a record 12th day in a row that Waha prices closed below zero. The prior record was 10 days in June 2025.

Daily Waha prices first closed below zero in 2019. They did so 17 times in 2019, six times in 2020, once in 2023, a record 49 times in 2024, 39 times in 2025, and 21 times so far this year, according to pricing data from financial firm LSEG.

Waha prices have averaged 76 cents per mmBtu so far this year, down from $1.15 in 2025 and a five-year average (2021-2025) of $2.88.