Permian Pipeline Expansion Brings Temporary Relief
· news
The Permian Pipeline Problem: A Temporary Fix for a Wider Issue
The Permian Basin’s natural gas woes have been well-documented. Recent announcements of new pipeline capacity coming online are being hailed as a solution to the region’s associated gas glut, but this development should be viewed with caution.
For years, the Permian has struggled with insufficient pipeline takeaway capacity, leaving producers to deal with unwanted byproducts of oil production. The Waha hub, which sets regional pricing benchmarks for Midland-area gas production and pipeline constraints, hit a record low of -$7.95 in April. However, thanks to the expansion of the Gulf Coast Express Pipeline (GCX) and Energy Transfer’s new Hugh Brinson Pipeline, the Waha price has turned positive.
Scratching beneath the surface reveals that this is not the end of the story. New pipeline capacity will take several quarters to alleviate current constraints, and even then, there are risks that new constraints could emerge. If the Strait of Hormuz crisis continues to drive up oil prices, additional drilling in the Permian could lead to an increase in associated gas production, undoing some of the gains made by the new pipelines.
The Permian’s pipeline problem is a symptom of a wider issue: the industry’s obsession with maximizing oil output often at the expense of natural gas. This has led to producers being forced to either flare or pay to dispose of associated gas rather than capturing its value as a valuable commodity.
Industry pipeline development plans for 2026 and 2027 are ambitious, with over 44 billion cubic feet per day (Bcf/d) of new capacity set to come online. However, it is unclear whether this will be enough to meet the region’s needs or simply create another set of problems. As operators bring back volumes that were previously curtailed or flared, there is a risk of creating another glut downstream.
The Permian pipeline problem has wider implications for the entire US energy landscape. The country’s increasing reliance on natural gas as a bridge fuel to cleaner energy sources means solving this problem is essential for meeting climate goals and ensuring energy security. However, the sector’s willingness to prioritize short-term gains over long-term sustainability raises concerns about its ability to adapt to changing market conditions.
A more nuanced approach is needed to address the root causes of the issue – the industry’s prioritization of oil output over natural gas capture. This will require a fundamental shift in how energy is produced and consumed, one that prioritizes sustainability and long-term thinking over short-term gains.
Reader Views
- RJReporter J. Avery · staff reporter
"The Permian's pipeline conundrum is far from resolved with these new pipelines coming online. The real challenge lies in the industry's fixation on oil production at the expense of gas. Without a fundamental shift in priorities, we'll continue to see associated gas as a byproduct rather than a valuable commodity. The real test will be whether these new pipelines create capacity for gas capture and utilization, not just more opportunities for flaring or disposal."
- ADAnalyst D. Park · policy analyst
The Permian's pipeline expansion is a Band-Aid solution at best. While new capacity will provide temporary relief from the associated gas glut, the root issue remains: producers are incentivized to prioritize oil output over natural gas utilization. This disconnect has significant economic and environmental implications. One critical consideration absent from the discussion is the impact on regional air quality. Flaring associated gas contributes to NOx emissions, exacerbating local pollution problems. As we continue to expand pipeline capacity, policymakers must address this issue head-on to ensure a more sustainable energy future for the Permian Basin.
- EKEditor K. Wells · editor
The Permian pipeline expansion is a Band-Aid solution for a more fundamental problem: the industry's failure to prioritize natural gas capture and utilization alongside oil production. As producers rush to develop new takeaway capacity, they're not addressing the root cause of the glut – a lack of innovative processing facilities that can economically extract value from associated gas. Until this bottleneck is resolved, Permian's pipeline woes will continue to ebb and flow with market conditions, rather than being genuinely alleviated.