Decade of Cheap Henry Hub Gas Coming to End, WoodMac Warns
In a statement sent to Rigzone recently, Wood Mackenzie warned that the decade of cheap Henry Hub gas is coming to an end.
The company projected in the statement that Henry Hub natural gas prices will approach $5 per million British thermal units (MMBtu) by 2035, which they highlighted would be “up from a nominal range of $2 to $4 per MMBtu that held for most of the past decade”.
Wood Mackenzie outlined in its statement that this Henry Hub price stability “underpinned the buildout of U.S. LNG export infrastructure and the expansion of gas-fired power generation now supporting AI-driven data center growth across the country”. The company highlighted that a recent report from the business focusing on U.S. Henry Hub prices “sets out why those conditions are no longer assured”.
In the statement, Wood Mackenzie noted that two structural shifts are working in the same direction at once. It pointed out that “demand continues to grow at a sustained pace” while “supply is becoming harder and more expensive to grow”.
Kristy Kramer, Head of LNG Strategy and Market Development at Wood Mackenzie, said in the statement that “the conditions that kept Henry Hub between $2 to $4 per MMBtu for the best part of a decade are no longer all operating at full force”.
“Rapid play development, near-zero-cost associated gas, and year-on-year productivity gains drove that era of cheap, stable prices,” Kramer added.
“Those tail winds have largely run their course. Power sector demand alone is calling for an additional 17 billion cubic feet per day by the mid-2030s, and the highest-quality acreage is already in production. Prices will need to rise to grow supply from here,” Kramer continued.
New USA Gas Demand
The power sector is now the primary source of new U.S. gas demand, Wood Mackenzie noted in the statement.
“Load growth from data centers and AI investment is set to add the equivalent of roughly half the gas demand of the entire existing power sector: an additional 17 billion cubic feet per day by the mid-2030s, a near-50 percent increase from 2025 levels,” Wood Mackenzie said.
Wood Mackenzie highlighted in the statement that investment decisions for new U.S. LNG export capacity reached a record high in 2025, “with further projects reaching final investment decision in 2026”. U.S. LNG capacity is on track to more than double from current levels, according to the statement, which said the U.S. is forecast to account for more than one-third of global LNG supply in the early 2030s.
“Demand expansion is expected to continue into the 2040s,” the statement noted.
“As the power sector leans more heavily on gas to balance intermittent renewable generation, demand has become structurally more volatile. Henry Hub prices will reflect that,” it added.
Supply
Wood Mackenzie pointed out in the statement that U.S. producers have spent years drilling their best acreage.
“As the highest-quality portions of Marcellus, Permian and Haynesville are developed, remaining inventory will be less productive and more geologically complex,” it said.
“Breakeven costs have stopped falling. Technology gains in mature plays are incremental rather than transformative,” it added.
Dulles Wang, Director, Americas Gas and LNG Research at Wood Mackenzie, noted in the statement that “associated gas accounted for roughly half of all U.S. gas supply growth over the past decade at near-zero marginal cost”.
“Over the next ten years, that share is expected to fall below 20 percent,” Wang warned.
“With supply less responsive to price signals than it once was, prices will need to go higher and stay higher to bring new molecules to market, particularly from dedicated gas producers,” Wang continued.
Kramer went on to state that “the scale of the U.S. LNG position may look like a commercial advantage” but added that, “as the U.S. moves past one-third of global LNG supply in the early 2030s, buyers are already asking questions about over-reliance on a single supply source”.
“Those questions will only get louder,” Kramer warned.
Wood Mackenzie noted in its statement that Henry Hub remains a localised benchmark, shaped by supply, demand, and infrastructure conditions in southern Louisiana. It highlighted that its forecast does not imply uniform price movements across all U.S. gas markets.
The company revealed in its statement that its forecast of rising Henry Hub prices has been “a defining and contested position over the past 18 months, generating sustained debate among utilities, LNG buyers, upstream operators and financial institutions”.
Stronger Signs of Support
In an EBW Analytics Group report sent to Rigzone by the EBW team on Tuesday, EBW Energy Analyst Eli Rubin noted that natural gas edged higher “on stronger signs of support”.
“The August natural gas contract tested as high as $3.320 per MMBtu this morning [Tuesday] - a July-to date high - as even the weakest daily cooling demand of July failed to erode Henry Hub spot prices,” he said.
“Enduring mid-summer heat and weaker production also defer bearish risk, although NYMEX winter contracts reached new multi-year lows,” he added.
The EBW report highlighted that the August natural gas contract closed at $3.245 per MMBtu on Monday. It outlined that this was a 4.9 cent, or 1.5 percent, increase compared to Friday’s close.
Rubin pointed out in the report that “physical prices at NYMEX natural gas benchmark Henry Hub - already slipping five cents per MMBtu to $3.28 per MMBtu into the long holiday weekend - dipped another two cents yesterday ahead of weather forecasts for the weakest national daily cooling demand of July”.
“While the inability for spot prices to increase during last week’s heat wave appeared ominous for the ability of the NYMEX front-month to break higher, recent relative strength despite milder immediate-term weather … reinforces support,” Rubin added.
“NYMEX futures trading at a premium to physical Henry Hub prices this morning [Tuesday] for the first time in two weeks may limit short-term economic signals for salt storage withdrawals,” he continued.
In the report, EBW predicted that the NYMEX front month natural gas contract price will probably be rangebound over the next seven to 10 days. The report predicted a structural weakening for the commodity over the next 30-45 days.
To contact the author, email andreas.exarheas@rigzone.com
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