The journey out of purgatory looks to be a long one for Permian natural gas, based on market activity in the wake of a new pipeline expansion.
The good news for producers: The start of a 570 MMcf/d compressor expansion on Gulf Coast Express Pipeline (GCX) sparked a near-$3/MMBtu rally at the Waha hub.
The bad news: Waha prices continue to trade below zero, meaning operators without firm pipeline transport out of the Permian Basin must pay other shippers to take their gas.
Kinder Morgan (KMI) last Wednesday (June 10) started flowing gas through the expanded Gulf Coast Express to two pipelines at the Agua Dulce hub. New GCX receipt meters tracked by East Daley Analytics showed the first gas flows of 90 MMcf/d on Tennessee Gas Pipeline (TGP) and 20 MMcf/d on Natural Gas Pipeline of America (NGPL), according to their bulletin boards. On Friday, combined flows increased to 129 MMcf/d on TGP and NGPL.
KMI has not confirmed the project startup but had targeted a 3Q26 in-service date. The start of the new compressors takes GCX’s capacity to 2.57 Bcf/d.
Waha traded at -$0.95/MMBtu Wednesday as new flows began, vs a recent low of -$3.68 on May 25 (see price chart). Prices held at -$0.95 Thursday and Friday (June 11-12).
Gulf Coast Express previously only delivered into Texas intrastate pipelines at Agua Dulce, including KM Tejas and Enterprise, which are difficult to monitor. Waha prices initially jumped at the end of May, reaching as high as -$0.30/MMBtu on June 4, suggesting the new expansion may have already been online and delivering into these intrastate systems at the start of the month.
The price volatility stemming from the new infrastructure underscores the stakes for Permian gas. Waha has consistently traded at negative prices since February, dragging down returns for producers despite higher crude oil prices.
On the flip side, rock-bottom prices have been a profit machine for certain midstream companies. Participants like Energy Transfer (ET) and Kinder Morgan (KMI) can buy cheap gas within the Permian and, using their intrastate pipeline and storage assets, sell at much higher prices elsewhere in the Texas market.
The GCX expansion is the first of several highly anticipated pipeline projects that will help debottleneck the Permian and bring relief to the basin’s producers. Next up is WhiteWater’s 2.5 Bcf/d Blackcomb Pipeline, due to start in 2H26. The exact timing is unclear, but the Blackcomb website guides to a 3Q26 in-service. Phase 1 of ET’s Hugh Brinson Pipeline is then scheduled to enter service in 4Q26. However, ET executives indicated on its 1Q26 earnings call that construction was ahead of schedule, and said Hugh Brinson could potentially begin delivering volumes as early as 3Q26.
See East Daley’s Permian Supply & Demand report for more on the outlook for the Permian gas market. – Andrew Ware and Alec Gravelle Tickers: ET, KMI.
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