The Permian gas pipeline bottleneck is forcing some producers to curtail or shut-in wells to limit their exposure to negative Waha hub prices, leading to a buildup of oil, gas and NGL production that will likely be unleashed later this year.
Waha spot prices consistently traded below zero from February to early June, reaching a low of -$9.55/MMBtu in mid-April as natural gas production has exceeded pipe takeaway from the Permian Basin. Prices have improved following the start of a 570 MMcf/d expansion on Gulf Coast Express Pipeline (GCX), though they remain well below other Gulf Coast hubs. Waha spot averaged ~$1.22/MMBtu in the second half of June, the highest prices since late January.
Multiple producers and midstream companies have acknowledged curtailments or well shut-ins in the Permian, citing low Waha prices as the driving factor. The disruptions appear to be mainly affecting operations in the more remote areas of the Delaware sub-basin, based on company commentary.
Reports from 1Q26 earnings updates include:
- Targa Resources (TRGP) noted “periodic producer shut-ins from weak Waha gas prices.”
- Kinetik (KNTK) estimated well curtailments on its Delaware G&P systems will average 220 MMcf/d in 2026, up from its prior forecast of 100 MMcf/d.
- “Despite higher crude oil prices since mid-March, we are still witnessing certain customers curtail throughput in the Delaware Basin due to stubbornly low and sometimes negative Waha natural gas pricing, ” Western Midstream (WES) said.
- Producer APA acknowledged it curtailed some gas volumes “due to weak Waha pricing.”
- Devon Energy (DVN) said it was “pulling back” production from its Permian wells with the highest gas-to-oil ratios, and instead will concentrate drilling on its oiliest acreage.
Not all Permian operators are exposed to low in-basin gas prices. Those with firm transport on egress pipelines, or prior sales agreements with marketers or midstream companies, can sell their gas at prices closer to $2.50/MMBtu outside the Permian. Others will opt to flare at the wellhead to continue lifting crude oil, assuming they can obtain the necessary permits from state or federal regulators.
In the latest Permian Basin Supply & Demand report, East Daley Analytics estimates basin-wide flaring averaged 1.7 Bcf/d in 1H26 due to the pipeline bottleneck. We expect operators will convert these volumes to marketable gas once new pipeline projects start later this year, bringing our flaring balance to zero by November.
However, if E&Ps are curtailing wells — or shuttering them outright — the calculus changes on hydrocarbon supply. Shut-ins mean some potential crude oil production is not flowing. Reservoir pressure also will remain strong behind shut-in wells, so initial production (IP) rates will be robust once operators turn them in line.
Several gas pipeline projects are expected to start later this year and relieve the pressure on Waha prices. Following Kinder Morgan’s (KMI) GCX expansion, WhiteWater’s Blackcomb Pipeline is due to come online in 2H26 and ramp to its full 2.5 Bcf/d capacity by year-end. Phase 1 of Energy Transfer’s (ET) Hugh Brinson Pipeline (1.5 Bcf/d) is expected to enter service in 4Q26, followed by Phase II (700 MMcf/d) in 1Q27. In total, the three projects could add ~4.5 Bcf/d of gas takeaway by YE26.
The timing on these new pipelines is critical to determining how long the pain from depressed Waha prices will endure. For example, ET indicated on its 1Q26 earnings call that construction of Hugh Brinson is running ahead of schedule, and said the pipeline could potentially begin delivering volumes as early as 3Q26. In the Permian S&D report, we currently estimate Hugh Brinson will begin operations in September, followed by Blackcomb in October.
See East Daley’s Permian Basin Supply & Demand report for more on the Permian outlook. We project Permian residue gas production will grow 1.4 Bcf/d by YE26, reaching 23.1 Bcf/d in December as these pipeline expansions relieve egress constraints. However, if well curtailments and shut-ins are prevalent, there is likely upside to our supply forecast in 4Q26. Oil and NGL production will also be stronger if operators en masse start flowing previously drilled wells. – Emily Cecchini Tickers: APA, DVN, ET, KMI, KNTK, TRGP, WES.
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