Rising Waha natural gas prices are pressuring the economics of Permian ethane recovery, while expanding domestic and international consumption is pushing demand into a new growth cycle. Something must give to balance the ethane market, and East Daley Analytics sees the Anadarko Basin as a prime toggle.
Historically, the Permian Basin has been the main swing supplier of US ethane. However, that role will be challenged in the years ahead by changing midstream dynamics.
New projects like the Gulf Coast Express expansion and the early start of Energy Transfer’s (ET) Hugh Brinson Pipeline have helped debottleneck Permian gas supply, lifting in-basin prices out of negative territory. Waha hub spot prices are up about $4/MMBtu since early June, coinciding with the start of the two pipe expansions. Further gains are likely to follow as additional pipelines (Blackcomb, Eiger Express) enter service later this year and through 2028.
Stronger natural gas prices disincentivize ethane recovery, as the molecule is more valuable to shippers if sold as part of the gas stream. East Daley expects ethane rejection to become a factor in the Permian as early as 4Q26, based on forward commodity prices.
New Demand Cycle on the Horizon
The headwinds to Permian ethane supply arrive at the same time demand is strengthening.
Domestic use will meaningfully expand with the startup of the Golden Triangle Polymers project in Orange, TX. The joint venture between Chevron Phillips Chemical (CP Chem) and QatarEnergy is expected online in early 2027.
Internationally, ethane exports are at record levels and set to continue growing. China has reemerged as the primary driver of ethane exports following the disruption caused by the US-China trade conflict last year.
Chinese imports plummeted in 2025 but still represented roughly 40% of total US ethane exports. By June 2026, China’s share had rebounded to ~80%, with US ethane shipments to China increasing 240% Y-o-Y. The speed of the recovery reinforces how closely US NGL supply is connected to Chinese petrochemical demand.
New dock capacity provides room for growth. Enterprise Products (EPD) in May started a Phase 2 expansion of its Neches River Terminal and has quickly ramped ethane shipments.
Marine transportation constraints are also easing. The global fleet of very large ethane carriers (VLECs) is expected to nearly double by the end of 2028, reducing vessel availability as a bottleneck for waterborne exports.
As shipping capacity expands, the limiting factors increasingly shift toward US export dock space, fractionation capacity and the availability of ethane supply. We forecast that current production and storage alone are unlikely to satisfy the next wave of domestic and export demand.
A Window for Anadarko Ethane
The combination of less-responsive Permian supply and growing demand will have several knock-on effects in the ethane market: Prices will need to rise, and greater recovery will be required from other producing regions.
The Anadarko Basin is positioned to capture that opportunity. Among the major US producing regions, the Anadarko offers the largest pool of incremental supply because of its historically elevated rejection rates.
In the NGL Hub Model, East Daley estimates the Anadarko will need to recover ~20% more ethane to help balance the next wave of demand growth (see figure above). The supply will come when the market bids ethane prices higher to incentivize producers and midstream operators to recover additional barrels, rather than reject ethane into the natural gas stream.
Bottom line: As Permian ethane recovery is challenged by stronger Waha gas prices, the Anadarko can gain market share and become one of the most important sources of incremental US ethane supply through the end of the decade. – Sam Chen Tickers: EPD, ET.
Demand is Coming. Where Will the Supply Come from — and Who’s Going to Deliver?
The largest growth cycle in US energy demand is on deck, and the infrastructure required to meet it could reshape US energy markets over the next decade.
LNG infrastructure in the Lower 48 and Mexico could grow by 45 Bcf/d by 2035, while gas-fired power generation serving data centers could add another 7.6 Bcf/d of natural gas demand. More than 32 Bcf/d of major pipeline expansions and newbuild projects have already been proposed to connect growing supply with LNG, power, residential and commercial demand.
And natural gas is only part of the story.
- Midstream consolidation is accelerating as operators position themselves from wellhead to water, including Williams’ move to acquire Momentum.
- Nearly 1,200 Mb/d of Y-grade and purity product expansions are proposed out of the Permian alone, while Mont Belvieu could face more than 1,000 Mb/d of fractionation constraints by 2032.
- A possible ATEX conversion project from liquids to gas could unleash more Northeast supply and reshape NGL flows in the region.
- Permian crude oil takeaway is already running tight, with routes to Corpus Christi at 99% utilization and Cushing/Houston routes at 92%. With only about 75 Mb/d of expansions on the books, takeaway capacity could become a constraint on future Permian growth.
- Roughly $32B per year of infrastructure has been sanctioned and underwritten by long-term contracts through 2031 — representing more than $191B of committed capital over the next five years.
Where are the biggest infrastructure gaps? Which projects get built? And which companies are positioned to capture the opportunity?
Join East Daley Analytics on August 26 at 10:00 AM MT as we connect the dots across natural gas, NGLs, crude oil and capital investment to map the infrastructure buildout ahead. Click here to register now and reserve your spot.
One Market, One Model: Gain a Holistic View of North America Supply & Demand
East Daley Analytics is pleased to announce the Canada Supply & Demand report. The Canada S&D completes our North American model, providing a fully integrated supply and demand forecast for crude oil and natural gas. East Daley follows molecules from Canadian production through US infrastructure to end-markets. Clients now have a continental view to anticipate trends, from how Canadian gas is reshaping Midwest markets, to how crude imports flow to Gulf Coast refiners. The Canada S&D report and dataset is available exclusively in Energy Data Studio. Reach out to learn more about East Daley’s North American energy model.
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