U.S. midstream sector expects increased gas production

U.S. midstream operators are expecting gas producers to boost flows in the near future, driven by demand from the power sector and an uptick in prices.  

Many U.S. producers have curtailed production over recent months in an environment of low gas prices, with Henry Hub spot prices trading in a $1.50 – $2.50 /mmbtu range since March. 

Source: Evaluate Energy 

But the Energy Information Administration (EIA) expects an increase in gas prices to average around $3.10/mmbtu in 2025 as LNG exports and power demand begin to grow.  

“There’s definitely a lot of opportunity to increase production [from] the producer end coming into 2025,” said Williams CEO Alan Armstrong on the company’s Q3 results call.  

Williams currently has about 4 bcf/d of gas capacity connected to its system in the Marcellus and Angel shale plays that is not currently flowing. However, the company anticipates these curtailments will be lifted in the near future and has already seen an increase in volumes since the summer.  

‘We are encouraged by the opportunity to be able to increase volumes pretty rapidly thorough our system…when prices do rebound, which we expect them to,” says Armstrong.  

He said this will initially be driven by gas demand for power generation, which has seen continued year-over-year growth in recent years.  

Meanwhile, Energy Transfer said it is confident that its Tiger, Rover and Gulf Run pipelines currently operating below capacity out of the Haynesville Shale, will return to full capacity as demand for gas increases. 

“There are enormous reserves … in the Haynesville. We have no worries whatsoever that Tiger and Gulf Run, for the future, will begin to grow again and remain full for many years to come,” said Dylan Bramhall, Energy Transfer CFO, on the company’s Q3 results call.  

Energy Transfer is currently chasing 16 bcf/d of demand from the power and data centre sectors, which it believes will exert a significant pull on gas through its pipelines.  

Enbridge is also seeing strong growth from the power sector, particularly due to the expansion of data centres, according to Michele Harradenc, Enbridge’s President of Gas Distribution. 

“We’re feeling very good about that growth,” she said on the company’s Q3 results call.  

LNG pull  

Increased demand for LNG exports is expected to emerge next year as the Plaquemines phase 1, Corpus Christi phase 3 and Golden Pass LNG terminals reach full export capacity. LNG demand pull is expected to grow by at least 2 bcf/d because of these startups, the EIA noted in its short-term energy outlook.  

Williams CEO Alan Armstrong said the line of sight to more LNG exports is becoming “clearer and clearer.” 

He said third party models are showing over 10 bcf/d of production growth from the Haynesville Basin by the early 2030s to meet LNG demand. 

Kinder Morgan saw a slight fall in gathering volumes in the third quarter. 

“We view the slight pullback in gathering volumes as temporary as higher production volumes will be necessary to meet the demand growth from LNG expected in the second half of 2025,” said Kinder Morgan President Thomas Martin on the company’s Q3 results call.  

Kinder Morgan expects a 25 bcf/d growth in the overall natural gas market over the next five years. 

Kinder Morgan this month announced the expansion of its Gulf Coast Express Pipeline (GCX) system in Texas, enabling customers with long-term throughput agreements to move additional volumes out of the Permian Basin towards Gulf Coast LNG export projects. 

The Evangeline Pass expansion project is now underway and will deliver an additional 1.1 bcf/d to the Plaquemines LNG export terminal on the Louisiana coast. 

Midstream operators are also anticipating the potential restart of federal approvals for LNG export projects if President-elect Donald Trump delivers on his promise to lift the ban.