U.S. natural gas production is projected to reach an annual record in 2026 as rising output from the Permian Basin and Haynesville supports supply growth, even as abundant inventories and strong production keep pressure on prices.
By yourNEWS Media Newsroom
The United States is on pace to produce more natural gas in 2026 than in any previous year, extending its position as the world’s largest producer as output from two major shale regions continues to expand, according to an Aug. 12 analysis from the Energy Information Administration.
U.S. natural gas production averaged 121.3 billion cubic feet per day during the first six months of 2026, an increase of 4% from the corresponding period in 2025, the agency reported in its latest Short-Term Energy Outlook.
For the full year, marketed natural gas production is forecast to average 122.5 billion cubic feet per day. That would exceed the previous annual record of 118.5 billion cubic feet per day established in 2025.
The projected increase adds to a transformation of U.S. energy production that has unfolded over nearly two decades.
The United States has ranked as the world’s largest natural gas producer since 2009, overtaking countries including Russia, Iran and Qatar as advances in drilling technology dramatically increased the amount of economically recoverable domestic gas.
Horizontal drilling combined with hydraulic fracturing opened extensive shale formations to commercial development, while a large pipeline network allowed producers to move greater volumes of gas from drilling regions to consumers and export facilities.
Much of the additional production in 2026 is coming from the Permian Basin, which spans portions of Texas and New Mexico, and the Haynesville formation in Louisiana and Texas.
Those two regions accounted for most of the country’s production growth during the first half of the year.
The EIA expects Permian natural gas production to increase 6% while Haynesville output rises 9%.
Although both areas are central to U.S. natural gas supply, producers in the two formations operate under different economic conditions.
Permian Basin drilling is primarily driven by crude oil production. Natural gas frequently emerges as an associated byproduct of oil wells, meaning gas production can continue growing even when natural gas prices alone would provide little incentive for additional drilling.
Haynesville producers, by contrast, drill overwhelmingly for natural gas. As a result, drilling activity there is considerably more responsive to changes in the Henry Hub benchmark price.
The EIA nevertheless expects Haynesville drilling to remain economically viable under its current price forecast.
The agency projects the Henry Hub spot price will average $3.44 per million British thermal units in 2026, a decline of 2%, or 8 cents, from its previous expectation.
“At this forecast price, drilling in the Haynesville remains economical despite the relatively deeper wells and more expensive development costs,” the report states.
The region also possesses a geographic advantage because of its proximity to the Gulf Coast, where producers have access to major industrial consumers and a growing concentration of liquefied natural gas export facilities.
“In addition, the Haynesville’s proximity to liquefied natural gas export terminals and major industrial natural gas consumers along the U.S. Gulf Coast draws operators to actively drill in the region.”
Despite record production, natural gas prices have faced sustained downward pressure during 2026.
Natural gas futures have fallen approximately 11% this year to about $2.80 per MMBtu on the New York Mercantile Exchange.
Strong domestic production has contributed to an oversupplied market in which available supply has outpaced demand.
Storage inventories have also remained unusually high. U.S. natural gas stocks are around 3.1 trillion cubic feet, nearly 7% above the five-year average.
The combination of robust production and elevated inventories has limited upward pressure on prices even as overseas demand for U.S. natural gas has strengthened.
Liquefied natural gas exports rose 15% from a year earlier in May and reached record levels.
The EIA projects U.S. LNG shipments could average 17.4 billion cubic feet per day during 2026 before increasing to more than 18 billion cubic feet per day in 2027.
Those growing exports provide an expanding source of demand for producers, particularly those operating near Gulf Coast liquefaction facilities.
Even with stronger LNG shipments, however, the EIA lowered its outlook for natural gas prices.
The Short-Term Energy Outlook now projects Henry Hub prices averaging $3.44 per MMBtu in 2026 and $3.31 per MMBtu in 2027.
“The price decline is driven by reduced [liquefied natural gas] feedgas demand and robust natural gas production,” the federal government said.
The agency also expects large inventories to continue weighing on prices as the summer winds down.
“Our forecast assumes prices will remain below $3.00/MMBtu in the coming months, driven by near record-high storage levels heading into October.”
Weather could provide some near-term support.
Phil Flynn, senior market analyst at The PRICE Futures Group, said intensifying heat across parts of the country later in August could increase electricity demand as homes and businesses use more air conditioning, requiring power generators to burn additional natural gas.
“A prolonged ridge is building across the South-Central and Southeast, bringing hazardous heat with highs in the lower 100s in parts of the southern Plains and Lower Mississippi Valley, widespread 90s farther east, elevated heat indices, and little overnight relief,” Flynn said in an Aug. 12 note.
“Cooling demand should firm up power-sector burn and help put a floor under prices after the recent slide.”
The competing forces leave the U.S. natural gas market entering the remainder of 2026 with historically high production and storage levels on one side and increasing LNG exports and weather-related electricity demand on the other.
Production growth remains the dominant feature of the EIA’s outlook. With output expected to average 122.5 billion cubic feet per day this year, the United States is positioned to surpass its 2025 record while the Permian and Haynesville regions continue to drive the expansion of the country’s natural gas supply.
Original article
Comments