Wood Mackenzie: Cheap Henry Hub gas era is ending
(WO) — The long-running era of low-cost U.S. natural gas is drawing to a close as rising demand and maturing supply reshape the Henry Hub market, according to a new report from Wood Mackenzie.
The consultancy forecasts Henry Hub prices approaching $5/MMBtu (real) by 2035, compared with the $2-$4/MMBtu range that largely prevailed over the past decade. The report attributes the shift to sustained growth in LNG exports, increasing gas-fired power demand from AI-driven data centers and slowing productivity gains across major U.S. gas plays.
"The conditions that kept Henry Hub between $2 to $4/MMBtu for the best part of a decade are no longer all operating at full force," said Kristy Kramer, head of LNG Strategy and Market Development at Wood Mackenzie. "Power sector demand alone is calling for an additional 17 Bcfd by the mid-2030s, and the highest-quality acreage is already in production."
Wood Mackenzie estimates the U.S. power sector will require roughly 17 Bcfd of additional natural gas by the mid-2030s as electricity demand rises and gas continues to complement renewable generation. At the same time, U.S. LNG export capacity is expected to more than double, positioning the country to supply more than one-third of global LNG volumes in the early 2030s.
On the supply side, the report says producers have already developed much of the highest-quality acreage in the Marcellus, Haynesville and Permian basins, reducing productivity gains and increasing development costs.
"Associated gas accounted for roughly half of all U.S. gas supply growth over the past decade at near-zero marginal cost," said Dulles Wang, director of Americas Gas and LNG Research at Wood Mackenzie. "Over the next ten years, that share is expected to fall below 20%."
According to Wood Mackenzie, the result is a structural shift in Henry Hub price formation—from a market primarily driven by abundant supply to one increasingly influenced by growing demand. The firm said the changing fundamentals will be a key consideration for upstream operators, LNG developers and buyers negotiating long-term supply agreements.
