Infrastructure – Just two months after acquiring E&P Paloma Natural Gas, hedge fund Citadel is already taking an activist role in the Haynesville.
Paloma produced roughly 350 MMcf/d at YE24 and did not run rigs for most of last year, but the private operator has ramped up its drilling program in 2025. Before the $1.2B acquisition by Citadel, Paloma added back 2 rigs in January. Under new management, Paloma’s rigs have climbed to 5 as of April 17, pushing the total Louisiana rig count to 18 several months ahead of East Daley’s forecast.
Paloma operates in the Louisiana portion of the Haynesville, sending most of its volumes to Kinder Morgan’s (KMI) Kinderhawk and Williams’ (WMB) Louisiana Magnolia systems. The growing queue of wells behind WMB’s Louisiana Magnolia is significant. Management reports 3 Bcf/d of initial production behind its Marcellus and Haynesville assets.
East Daley forecasts WMB’s Haynesville G&P volumes to increase by ~659 MMcf/d (20%) from 2024-25 (exit-to-exit). The growth will support volumes on the company’s greenfield Louisiana Energy Gateway pipeline (1.8 Bcf/d, ISD 3Q25), which will connect Haynesville supply to new LNG demand at Gillis.
We have been calling for production growth out of the Haynesville in order to balance incremental LNG demand on the Gulf Coast from the Plaquemines and Golden Pass projects. Plaquemines LNG is already taking in over 2 Bcf/d, well ahead of schedule, and Golden Pass LNG is expected to begin ramping in early 2026. East Daley’s latest production forecast calls for 53 total Haynesville rigs exiting 2025, while residue gas needs to exceed 17 Bcf/d, relying mostly on deferred production to do so.
Infrastructure – Midstream company NeuVentus is developing a new natural gas storage hub, the Texas Reliability Underground (TRU) project, 40 miles east of Houston. The project is part of an industry push to prepare for load growth along the Gulf Coast while managing around a regional pipeline bottleneck.
In the Macro Supply & Demand Report, East Daley Analytics expects LNG demand at the Texas-Louisiana border to more than double by the end of the decade. Nameplate LNG demand currently totals ~7.8 Bcf/d from the Sabine Pass, Cameron, and Calcasieu Pass LNG facilities. By late 2029, demand could grow to as high as 16.8 Bcf/d (see figure).
This creates a problem managing flows at the constrained Texas-Louisiana border crossing.
EDA lays out the challenge in the Houston Ship Channel Supply & Demand Report. Currently, only ~3 Bcf/d of pipeline capacity is available from the Houston Ship Channel across the Louisiana border to supply this growing LNG demand. As more Permian gas moves to the Gulf Coast, wide swings in regional prices become more likely.
The Ship Channel saw significant volatility in 2022-23 due to pipeline bottlenecks accessing Henry Hub. The influx of Permian gas and growing Haynesville production resulted in basis as weak as $1.97/MMBtu in December ‘22. Recently, in January ‘25, prompt month at HSC traded at a $0.02 premium to the Henry Hub, spurred by fears of winter weather in Texas. However, February prices at HSC eventually settled $1.05 back from Henry, well below the roughly $0.30 transport cost, indicating that upstream constraints are preventing Permian gas from accessing Louisiana markets.
New capacity on Kinder Morgan’s (KMI) Trident Intrastate in 1Q27 (+1.5 Bcf/d) and the combined Blackfin – CP Express line (+3 Bcf/d) should reduce constraints on Texas gas reaching Louisiana LNG projects. However, East Daley still sees some uncertainty, driven primarily by the timing of new infrastructure.
While Blackfin is expected online as early as YE25, the pipe only extends as far as Jasper County in Texas, and an interconnect with CP Express is necessary to move molecules across the border. CP Express is still in the permitting phase, and we expect that pipeline to primarily serve Venture Global’s CP2 LNG, which we don’t expect to come online before 2028.
Several developers have proposed storage expansions to address the infrastructure deficit along the corridor. Austin-based NeuVentus plans to hold an open season for the TRU hub in the near future.
Located near the Moss Bluff salt dome, the TRU project aims to add ~20 Bcf of working storage capacity in two salt caverns, with potential to develop as many as 12 salt caverns (see map). Phase 1 also includes a north-south header line connecting to nine inter- and intrastate long-haul gas pipelines, mostly in Liberty County, TX. The project would add needed liquidity to a fast-growing premium market.
Storage – Traders and analysts expect the Energy Information Administration (EIA) to report a net 66 Bcf net storage injection for the week ending April 18. A 66 Bcf injection would be 8 Bcf greater than the 5-year average, dropping the deficit to 66 Bcf. The storage deficit versus last year would increase by 20 Bcf to 500 Bcf.
The prompt-month gas contract continues to waffle around $3/MMBtu, and cash prices have retreated below $3 this week. Continued shoulder season malaise and a lack of real heat have led to over a 25% decline in the price of natural gas since February. Mild temperatures in March led to a net injection, the first time since 2012 that storage gained ground over the last month of the heating season.
In this month’s edition of the Macro Supply & Demand Report, East Daley does not anticipate prices to rally until gas-fired power demand starts to perk up. In May we anticipate that gas-fired power burn will average 32.1 Bcf/d, or about 0.1 Bcf/d less than the May 2024 average. With production sitting about 4.2 Bcf/d higher than levels last May, stout supply is leading to higher net injections on a weekly basis. The next three weeks could see triple-digit injections, further discouraging price from gaining any ground through mid-May.
Rigs – The US rig count increased by 5 for the April 12 week to 574. The Marcellus+Utica (+2), Marcellus NE PA (+1), DJ (+1) and ArkLaTex (+1) all added rigs on the week while the Permian and Powder River basin each lost a rig. The Barnett also lost 1 rig on the week.
On the midstream side, Energy Transfer (ET) is down 5 rigs net with losses on its Permian, Anadarko and ArkLaTex systems. Enterprise Products (EPD) is down 4 rigs total with reductions on its Delaware, Midland and Eagle Ford systems.
East Daley’s weekly Rig Activity Tracker monitors rig activity by basin and by gathering and processing (G&P) system to better understand midstream impacts. We allocate rigs and monitor flows through 150+ public and privately owned G&P systems in every North American basin. Reach out for more information on the Rig Activity Tracker.
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