Citigroup expects Permian Basin to become largest U.S. natural gas producing region by 2030

en.Wedoany.com Reported - Analysts at Citigroup Inc. expect the Permian Basin to become the largest natural gas producing region in the United States by the end of this decade, with the world's highest-yielding shale oil field also becoming the leader in U.S. natural gas supply by then.

This shift means the Permian Basin, which covers parts of West Texas and southeastern New Mexico, will surpass the Marcellus shale. According to data from the U.S. Energy Information Administration, the Marcellus Basin, spanning Pennsylvania, West Virginia, and Ohio, has held the position of the largest natural gas producing region in the United States since 2012.

The rise of the Permian Basin will reshape the U.S. natural gas market landscape, shifting the market toward oil fields whose production is largely unresponsive to natural gas supply and demand. Unlike the Marcellus, the economics of Permian production depend primarily on oil prices, with natural gas produced as a by-product, not a product actively pursued by producers—and sometimes even unwelcome.

Citigroup analyst Scott Gruber said in an interview with Bloomberg that this reserve-rich basin could become the natural gas production leader as early as 2030, with the actual pace depending in part on oil price trends.

Natural gas prices in the Permian Basin have already been negative for four months this year, as increased oil production has flooded the market with natural gas, while pipelines transporting gas to end users continue to operate at full capacity. Some producers have shut in wells with high gas-oil ratios to limit losses. A batch of new natural gas pipelines in Texas recently secured financing and is expected to resolve the current pricing dislocation once completed.

Citigroup analysts Gruber, Paul Diamond, and Johan Monge noted in a report to clients that increased Permian natural gas supply also means major gas-producing shale regions will not need to significantly boost output to meet growing demand sources, such as the Haynesville Basin in northwestern Louisiana and East Texas. As new LNG export terminals and high-electricity-demand data centers come online, capacity expansion will temper long-term bullish expectations for natural gas prices.