Negative natural gas prices have returned to the Permian Basin

Negative natural gas prices have indeed resurfaced at the Waha Hub in the Permian Basin, a stark reminder of persistent infrastructure bottlenecks amid booming associated gas production from oil drilling. As of mid-February 2026, cash prices were negative on 38 out of 51 days, outpacing prior records and pressuring producers despite brief spikes from events like Winter Storm Fern.

Causes of Negative Pricing

Explosive Permian gas output, averaging 23.67 Bcf/d in early 2026, far exceeds takeaway capacity, forcing operators to pay to offload surplus or flare it. Pipeline maintenance on lines like El Paso Natural Gas, weak regional demand (e.g., from California and Texas power burn), and reduced LNG feedgas intake compound the issue, widening the Waha-Henry Hub basis to -$3.60/MMBtu.

Production and Infrastructure Strain

Permian producers prioritize oil, generating abundant "associated" gas as a byproduct, with output peaking above 22.5 Bcf/d in 2025 before slight pullbacks. New pipelines like Matterhorn Express (mid-2024) offered temporary relief, but expansions haven't kept pace; full 4.5 Bcf/d additions aren't expected until H2 2026.

Factor	Impact on Prices ​
Gas Production	23.67 Bcf/d (early 2026 avg.) – Oversupply
Negative Days	38/51 (Feb 2026) – Record pace
Waha Basis	-$3.60/MMBtu (Feb avg.) – Deep discount
Flaring Uptick	Rising since June 2025 – Waste signal ​

Implications for Permian Operators

These dynamics erode margins for gas-heavy plays, prompting output cuts and hedging; Summer '26 Waha futures trade at -$0.33/MMBtu. For Midland-based pros like you, it highlights risks in event planning—flaring scrutiny could tie into regulatory talks at forums like National Petroleum Day.

Outlook and Relief Ahead

Pipeline projects like Apex (2.5 Bcf/d, 2026) and Blackcomb (2.8 Bcf/d, 2027) promise ~9-10 Bcf/d more capacity, potentially unlocking growth and stabilizing prices by late 2026. Until then, expect volatility; LNG demand may provide a floor nationally, but Permian constraints persist.