The U.S. Energy Information Administration projects record U.S. natural gas production and consumption through 2027, driven by drilling efficiency and rising LNG export capacity. At the same time, an Ernst & Young study finds gas producers growing output and reserves while cutting capital spending, a divergence from oil, where reserve replacement fell short for the first time since 2021.
Production and demand set consecutive records
US natural gas production is projected to hit a record 111.7 billion cubic feet per day in 2026, up from 107.6 bcfd in 2025, according to the EIA's Short-Term Energy Outlook. The agency expects supply to climb further to 115.9 bcfd in 2027.
Domestic consumption is following the same trajectory, rising from a record 91.9 bcfd in 2025 to 111.7 bcfd in 2026 and 115.9 bcfd in 2027. The EIA attributes the growth to drilling efficiency, rising electricity demand and expanding LNG export capacity, even as producers keep spending selective. The Permian and Haynesville shale plays are leading the increase, and gas inventories are on track to start winter about 5% above the five-year average on Oct. 31.
The September forecast also moved higher than the agency's prior estimate: August's outlook had pegged 2026 production at 111.2 bcfd and demand at 92.0 bcfd. LNG exports are climbing in step, from a record 15.1 bcfd in 2025 to an expected 17.4 bcfd in 2026 and 18.6 bcfd in 2027.
Producers cut spending as gas reserves outperform oil
An Ernst & Young study of the 30 largest publicly traded US exploration and production companies found that while M&A continues to play an important role in shaping portfolios, producers are prioritizing operational performance, capital efficiency and maximizing returns from current assets. Recent deals include Chevron's $53 billion takeover of Hess and ExxonMobil's $59.5 billion acquisition of Pioneer Natural Resources. Even so, total capital expenditures fell 49% year over year. M&A spending declined 70% over the same period.
Natural gas fundamentals diverged sharply from oil in the five-year study. Gas production rose 18%, while reserves increased 14% and discoveries climbed 21%, with reserve additions turning positive for the first time since 2021. Oil told a different story: reserve additions from extensions and discoveries fell 11% year over year, failing to fully replace production for the first time since 2021. Combined oil reserves slipped by less than 1%.
The study points to growing LNG demand, rising electricity consumption and the expansion of AI-related infrastructure and data centers as factors supporting long-term natural gas demand.
Source: Oilprice.com
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