Permian Basin natural gas prices at the Waha hub have fallen to historic negative lows. A massive oversupply in West Texas and New Mexico forces producers to pay to have the fuel removed.
This glut stems from booming oil production, where gas is extracted as a byproduct known as associated gas. A critical lack of pipeline capacity prevents the surplus from reaching necessary markets.
This infrastructure bottleneck traps gas regionally, forcing producers to choose between flaring or selling at a loss. Producers maintain these loss-making sales to avoid shutting down more profitable oil wells.
While new pipeline projects and expansions offer temporary relief, rising production continues to outpace takeaway capacity.