The Matterhorn Express Pipeline, due to begin service in September, will significantly increase natural gas pipeline capacity in the Permian Basin, according to a new analysis from the U.S. Energy Information Administration. This new capacity will be able to transport natural gas currently “locked up” in the Waha region to domestic and international customers, and consequently could help stabilize regional pricing dynamics in the Waha region.

Untapped reserves with belated operational infrastructure

The EIA reports that the Matterhorn Express Pipeline has a capacity of 2.5 billion cubic feet per day (Bcf/d) and should start operations this month.

Most of the natural gas pipeline network in Texas targets the Gulf Coast Industrial Corridor. However, Matterhorn provides direct access to the Waha region while building further redundancies towards the Coast. Per Reuters, the Matterhorn Express Pipeline is the “biggest gas pipe” in construction capable of transporting gas trapped in the Permian Basin.

In addition to Matterhorn, three other pipelines – already approved – will add a combined capacity of 7.3 Bcf/d to the Permian Basin in the upcoming years.

These new pipelines will serve both domestic and foreign demand:

“For one thing, more LNG is going to be flowing overseas in 2025. Additional liquefied natural gas capacity is ramping up on the Gulf Coast. Western Canada next year should begin exporting gas – for the first time – to Asian markets. And Mexico continues to draw copious imports from Texas.” (Natural Gas Intelligence, 8.23.2024)

Sustainable regional pricing dynamics

This pipeline also presents relief for local producers in the Permian Basin which have struggled with low prices throughout most of 2024. For instance, the lowest price on record for 2024 was negative $6.41 per million British thermal units.

And according to Natural Gas Intelligence, the Waha Hub prices have been below zero for 46 percent of trading days in 2024. So, despite the large volumes of in-demand natural gas in the basin, local producers effectively lost money due to limited midstream capacity.

The EIA explains that this is due to a lack of infrastructure to offtake and transport the Permian Basin’s natural gas. Despite Waha’s abundant gas resources, if the region does not currently have sufficient infrastructure to transport it to where there is demand, the Basin ends up in oversupply. The spot natural gas prices at the Waha Hub then decrease, and in some cases, drop below zero.

In addition to losing value on the whole, the Waha Hub prices have become highly volatile (as shown in the graph below), causing risk and uncertainties for producers in the region.

The entry in service of the new pipelines, including Matterhorn, will increase the supply of gas from this region to the rest of the country and the world. It’s likely that new midstream infrastructure will stabilize Waha Hub prices and bring them into more close alignment with Henry Hub prices.

By increasing the pipeline takeaway capacity of the Permian Basin, the Matterhorn pipeline will distribute gas more efficiently and stabilize spot prices for producers in the Waha Hub region.

Bottom line: Energy security also means investing in infrastructure capacity. This is key not only to provide energy affordability and access, but also price stability for producers so that they can invest predictably year-over-year in new technologies that allow for more sustainable production of oil and natural gas in the Permian Basin.

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