U.S. natural gas prices are set to rise through 2035, following a decade of low Henry Hub prices, as the AI data center boom and the expansion of U.S. LNG export infrastructure will underpin strong demand, analysts at Wood Mackenzie say.
During the decade to 2025, the benchmark U.S. Henry Hub prices remained in a narrow range of between $2 per million British thermal units (MMBtu) $4 per MMBtu, thanks to the surge in U.S. gas production as operators invested in standalone gas plays and boosted associated gas production from oil plays. Well productivity and technology gains have also helped raise domestic gas output.
As a result, prices have remained low for most of the past decade, but the era of cheap U.S. gas may be coming to an end, WoodMac’s analysts said in a new report out this week.
So what has changed?
First, U.S. LNG exports have soared over the past decade since Cheniere Energy shipped out the first LNG cargo from Sabine Pass in February 2016.
Ten years later, the U.S. is the world’s biggest LNG exporter, having overtaken Qatar and Australia in recent years.
U.S. LNG exports surged from 0.5 billion cubic feet per day (Bcf/d) in 2016 to 15.0 Bcf/d in 2025, data from the Energy Information Administration (EIA) show.
Exports are further set to rise to as much as 18.1 Bcf/d in 2027, while export capacity is set to nearly double by 2031 compared to December 2025, according to the U.S. administration.
By 2050, “you could see a scenario where the U.S. market looks like 40 to 45 billion cubic feet a day of production of LNG, so more than sort of almost a tripling of where we’re currently sitting today,” Charlie Riedl, Executive Director of the Washington-based trade association Center for Liquefied Natural Gas, told a media briefing last month.
Rising exports and continuously expanding export infrastructure have created a lot of additional demand for domestically produced natural gas.
Currently, LNG exports represent about just over 15% of total demand in the United States, Riedl noted.
Yet, the U.S. has the capability to boost its natural gas production to meet the growing demand, “just because of the vast reserves of natural gas that we have here and the efficiencies that the companies we represent have gained, both in their upstream methodology but also in optimization of our facilities,” Riedl said.
Wood Mackenzie analysts, however, believe that the surge in U.S. LNG exports will combine with the power needs of the AI data centers to drive gas demand materially higher. But operators have mostly tapped out the highest-quality gas acreage, technology gains appear to be plateauing, and a decline in oil-directed drilling is set to reduce the volumes of associated gas, according to WoodMac.
Due to the changing supply and demand dynamics, Wood Mackenzie expects a sustained increase in Henry Hub prices over the next decade, with prices approaching $5 per MMBtu by 2035, with soaring gas demand across the power, industrial, and LNG export markets.
Related: Power Prices Triple on PJM as Heat Wave and Data Centers Collide
Even $5/MMBtu gas will be competitive on the international markets, as prices in Europe and Asia are much higher.
Yet, the era of cheap gas may be over, according to WoodMac.
The tailwinds of the past decade—rapid play development, near-zero-cost associated gas, and productivity gains each year – have largely run their course, 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,” Kramer said.
Early this year, Global Energy Monitor said in a report that the U.S. nearly tripled its gas-fired capacity in development in 2025, totaling almost 252 gigawatts (GW) in projects in announced, pre-construction, and construction phases.
“More than one-third of this capacity is slated to directly power data centers on-site, and many more on-grid projects are planned to meet an anticipated increase in energy demand from AI,” Global Energy Monitor said in its Global Oil and Gas Plant Tracker.
By Tsvetana Paraskova for Oilprice.com
