Executive Summary:
Infrastructure: Chevron plans to build its first natural gas-fired power complex for a data center in West Texas, part of a trend East Daley Analytics anticipates to take advantage of abundant Permian Basin gas.
Rigs: The US rig count increased by 9 for the week of Jan. 10 to 524 rigs.
Flows: US natural gas volumes in pipeline samples averaged 68.2 Bcf/d for the week ending Jan. 11, down 1.6% W-o-W.
Storage: Traders and analysts expect the EIA to report an 87 Bcf storage withdrawal for the week ending Jan. 9.
Infrastructure:
Chevron (CVX) is emerging as a player in AI power generation. The major plans to build its first natural gas-fired power complex for a data center in West Texas, part of a trend East Daley Analytics anticipates to take advantage of abundant Permian Basin gas.
Chevron aims to make a final investment decision on the project by early 2026 and begin generating power in 2027, the company announced in November, starting with 2.5 GW of capacity and possibly expanding to 5 GW for a single data-center client. The facility is designed to operate behind the meter, delivering electricity directly to the colocated data center. The project supports CVX’s transition from a conventional fuel supplier, to directly selling electrons to hyperscale consumers.
West Texas fits well in the model. CVX can supply the plant with gas from its Permian oil operations and lean on existing G&P infrastructure to deliver fuel for baseload power. The strategy supports more reliable pricing for Permian gas supply by tying it to firm, behind-the-meter power sales.
East Daley expects this approach to create a durable new demand wedge for Permian gas. Texas is already a growth market for data centers, and building projects directly in the Permian makes sense.
For developers, it connects projects with reliable fuel to generate power, and solves for power-grid interconnect hurdles. For producers, data centers would support a steady market for their associated gas and solve for pipeline takeaway concerns. They would also shield operators from in-basin price volatility. Waha prices have frequently traded near zero or negative in recent years when Permian gas production outruns pipeline egress.
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The CVX project is one of several Permian-based data centers East Daly is following in the Data Center Demand Tracker (see map of West Texas data center projects). Chevron has not disclosed the expected gas consumption, but a multi-gigawatt combined-cycle facility of this scale implies several hundred MMcf/d of steady in-basin gas demand. Upside would be materially higher if the project expands toward 5 GW.
CVX is also pursuing similar colocated “power foundry” campuses with Engine No. 1 (energy-focused investment firm) and GE Vernova gas turbine and power systems provider) across the Southeast, Midwest and West, suggesting the Permian build could serve as a template for repeatable gas-to-power projects.
Bottom Line: Behind-the-meter campuses will complement the boom underway in Permian long-haul gas pipelines. East Daley forecasts over 10 Bcf/d of new takeaway by 2030 from greenfield projects like Blackcomb, Desert Southwest and Eiger Express. Data centers would soak up associated gas locally, creating new markets when egress is tight and supporting higher in-basin prices.
Rigs:
The US rig count increased by 9 for the week of Jan. 10, bringing the total rig count to 524. The ArkLaTex and Permian basins led the W-o-W gains, each adding 3 rigs. The Anadarko (+1) and Eagle Ford (+1) also added rigs on the week. The Powder River lost 1 rig W-o-W.
See East Daley Analytics’ weekly Rig Activity Tracker for more information on rigs by basin and company.
Flows:
US natural gas volumes in pipeline samples averaged 68.9 Bcf/d for the week ending Jan. 18, down 1.1% W-o-W.
Flows in major gas basins declined 1.4% W-o-W to 42.0 Bcf/d. The Haynesville sample slid 0.8% to 9.5 Bcf/d, while the Marcellus+Utica declined 1.8% to 31.7 Bcf/d. The Barnett sample jumped was 7.0% higher W-o-W.
Samples in liquids-focused basins were mostly flat, decreasing 0.1% to 19.1 Bcf/d. The Permian sample gained 1.1% to 6.5 Bcf/d, and the Eagle Ford sample declined 1.7% W-o-W.
Storage:
Traders and analysts expect the Energy Information Administration (EIA) to report a 104 Bcf storage withdrawal for the week ending Jan. 16. A 104 Bcf draw would bring the surplus to the 5-year average up to 193 Bcf from 106 Bcf last week. The surplus to last year would increase from 33 Bcf last week to 157 Bcf.
The market has largely already “sold” the upcoming bearish storage release and turned bullish based on a dramatic change in the weather forecast over the weekend. The 6- to 10-day and 11- to 15-day forecasts show intensely cold weather plunging into the Midwest and spreading through the Northeast and Southeast. The prompt month rallied nearly 25% on Tuesday (Jan. 20), closing in on $3.90/MMBtu in response. In short, everything east of Chicago, including the nation’s largest population centers will be cold for the balance of the month, with some forecasters projecting this to be one of the coldest stretches of the past 30 years.
All eyes will be on the next two EIA storage surveys for the weeks ending Jan. 23 and Jan. 30, when a combined 570 Bcf of gas could be withdrawn as a result of frigid temperatures. The turn in weather is likely to whipsaw the market back into deficit territory before the end of the month, setting up a much tighter market for the balance of winter.
See East Daley’s latest Macro Supply & Demand Report for more analysis on the winter market outlook.
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