California Shrugs Off Reduced Natural Gas Flows as Negative Permian Prices Persist Key insights on the natural gas market provided by NGI's price and data analysts There have been only 10 days so far this year in which Permian Basin benchmark Waha has traded above zero, highlighting the disconnect between surging global natural gas prices amid the Iran war and domestic oversupply in one of the Lower 48’s most prolific basins. Along with robust production, however, Waha’s negative $3.415/MMBtu average price on Monday (March 23) reflected another aspect of the current situation in the Permian — the impact of routine maintenance on a market that is persistently starved for pipeline capacity. With temperatures thawing from the winter, springtime typically ushers in a wave of field and pipeline maintenance activities to prepare for a rise in demand during the summer. El Paso Natural Gas Pipeline Co. LLC (EPNG), which transports more than 5 Bcf/d out of the Permian, has a pair of planned maintenance events this week that would shut in more than 600 MMcf/d. The bulk of that is to occur at the Vail Station in Pima County, AZ, where more than 500 MMcf/d is expected to be shut in through Thursday. EPNG lifted a separate force majeure in Arizona last week, restoring about 150 MMcf/d of throughput across eight constraints. Despite the cut in throughput for natural gas heading to California, prices in the Golden State remained among the cheapest in the country on Monday. SoCal Border Avg. prices averaged only $1.365 on Monday, while SoCal Citygate averaged $2.260. East Coast prices, meanwhile, remained north of $3.000. This is notable considering the record-breaking heat wave in the West that is forecast to send temperatures to as much as 35 degrees above normal in the coming days. That could be because although the heat poses an increased risk of fire, it also bodes well for solar generation, which has been steadily on the rise in California. In February, for example, solar generation in the California Independent System Operator footprint reached a peak of nearly 20,000 MW, up about 10% year/year. Natural gas generation, meanwhile, hit a high of only 14,500 MW in February, down 18% year/year. Forward prices reflect California’s ambitions to have more than 40,000 MW of installed solar capacity by 2030. SoCal Border Avg. natural gas prices are expected to average $3.605 in 2027 and drop to $3.510 by 2030, and SoCal Citygate prices average $4.555 in 2027 and drop to $4.487 by 2030, according to NGI’s Forward Look data. Conversely, a wave of new midstream infrastructure in the Permian is driving considerable support for Waha, which is seen averaging $2.570 in 2027 and $2.852 by 2030.
