US Natural Gas Market Verging on Record Growth

The U.S. Energy Information Administration said in its Short-Term Energy Outlook that domestic natural gas production will climb to a record 111.7 billion cubic feet per day (bcfd) in 2026, up from 107.6 bcfd in 2025, and to 115.9 bcfd in 2027. The agency emphasized that supply gains will be matched by rising demand, creating a period of simultaneous record-high production and consumption.

EIA projections show consumption rising from a 2025 record of 91.9 bcfd to 111.7 bcfd in 2026 and 115.9 bcfd in 2027. The report attributes production growth to improvements in drilling efficiency as well as higher electricity-sector gas use and expanding LNG export capacity, even as some producers maintain selective capital spending. The Permian and Haynesville shale regions are identified as leading sources of the growth, and U.S. gas inventories were forecast to be about 5% above the five-year average at the start of winter on Oct. 31.

The agency also raised its September projections compared with August forecasts, noting higher 2026 estimates for both production and demand. On the export side, EIA expects average U.S. LNG exports to rise from a record 15.1 bcfd in 2025 to 17.4 bcfd in 2026 and 18.6 bcfd in 2027, reflecting increased global and domestic export capacity.

Complementing the EIA outlook, an Ernst & Young benchmarking study of the 30 largest publicly traded exploration and production companies found the U.S. oil and gas industry is prioritizing operational performance and capital efficiency over aggressive expansion. The EY study highlighted recent major M&A transactions — including a reported $10 billion combination of Tamarack Valley Energy and Headwater Exploration, Diversified Energy’s $1.8 billion acquisition of Birch Permian Holdings, Chevron’s $53 billion takeover of Hess, and ExxonMobil’s $59.5 billion deal for Pioneer Natural Resources — even as total capital expenditures fell 49% year over year and M&A spending declined 70%. The study also reported divergent reserve trends: oil production hit a high in 2025 while oil reserve additions from extensions and discoveries fell 11% year over year, whereas natural gas production, reserves and discoveries all grew (production +18%, reserves +14%, discoveries +21%), with reserve additions for gas turning positive for the first time since 2021.