In its Annual Energy Outlook 2025 (AEO2025), the U.S. Energy Information Administration (EIA) projects regional differences in natural gas markets will encourage increased natural gas flows from the mid-Atlantic to the southern Gulf Coast in the coming decades. Across the cases explored, it projects production from the Appalachian Basin in the mid-Atlantic and Ohio region will increasingly meet growing demand on the Gulf Coast in the South-Central region, driven largely by increasing LNG exports. The economics of increased production in the Appalachian Basin are more favourable by 2030, and the EIA’s model shows natural gas transiting through the Eastern Midwest region on the way to the Gulf Coast.
Assumptions were frozen for AEO2025 in December 2024, and the EIA did not include market changes, recently passed legislation, regulations, executive actions, or court rulings after that date.
Nearly all existing US LNG export capacity is on the US Gulf Coast, and all new capacity built in AEO2025 is on the Gulf Coast in Texas and Louisiana. The EIA projects natural gas converted to LNG for export will increase to 9.8 trillion ft3, or almost 27 billion ft3/d, in 2037 in the reference case compared with 4.4 trillion ft3 in 2024. Of this new capacity, the EIA assumes the five LNG export projects already under construction enter service by 2028 and account for almost 60% of the projected growth. The remaining 40% results from additional LNG export capacity the model projects will be economical to build later in the projection period. After the mid-2030s, the EIA expects exports to remain essentially flat through 2050.
The EIA projects natural gas production in the East region, where the Appalachian Basin is located, will increase across almost all its cases. For the reference case, this volume grows from 12.6 trillion ft3 in 2024 to over 19.6 trillion ft3 by 2050. The Appalachian Basin contains the most abundant and economical-to-access natural gas resources in the US.
In contrast, production in regions closest to the Gulf Coast decreases over the projection period. In the reference case, natural gas production decreases by a combined 3.3 trillion ft3 in 2050 compared with 2024 in:
- The Southwest region, home to the Permian Basin and associated plays.
- The Gulf Coast region, home to the Haynesville and Eagle Ford plays.
- The Offshore Gulf of America.
Declining natural gas production can be attributed to several play-specific factors. Natural gas production from the Permian Basin is largely a byproduct of crude oil drilling activities. The EIA projects it will decrease as crude oil production declines. The Haynesville formation is much deeper than other natural gas formations, making it more expensive to drill. Its proximity to LNG export terminals has led to drilling and infrastructure investments that result in natural gas production increases midway through the projection period. Projects in the Offshore Gulf of America tend to be more capital-intensive and require longer lead times than onshore projects. Natural gas production has decreased over the last decade, a trend the EIA projects will continue.
Most US natural gas market hubs are priced relative to the Henry Hub in southern Louisiana, the national benchmark price used both in futures contracts and to price US LNG exports overseas. Regional differences in natural gas prices relative to Henry Hub reflect local supply-demand dynamics, and they indicate incentives to transport natural gas from low-price to high-price markets.
In the AEO2025 reference case, the Henry Hub natural gas spot price increases to US$4.80/million Btu in 2050, denominated in 2024 dollars, compared with US$2.19/million Btu in 2024. In 2024, natural gas prices averaged US$0.75/million Btu more on the Gulf Coast than in the East region, indicating that resources in the East are more economical to produce even when including the costs to transport natural gas to consumers in Texas and Louisiana on the Gulf Coast. The EIA projects this regional price differential will persist and widen across the AEO2025 cases, increasing to more than US$2.00/million Btu by 2050 in the reference case. This gap encourages infrastructure builds, such as pipelines, that facilitate increased natural gas flows out of the East and to the Gulf Coast.