For much of the shale era, U.S. midstream growth followed a familiar formula:
more rigs → more wells → more pipelines.
Kinder Morgan’s Q4 2025 earnings call made it clear that formula has fundamentally changed.
Rather than anchoring its outlook to drilling growth or rig counts, Kinder Morgan framed U.S. supply through a very different lens — one centered on demand pull, infrastructure utilization, and basin-specific dynamics.
Here’s what the company said about U.S. drilling activity by market and play, and why it matters for the next phase of North American gas and LNG development.
Big Picture: Drilling No Longer Drives the Outlook
Across the entire call, Kinder Morgan rarely referenced drilling activity as a growth catalyst.
Instead, management repeatedly emphasized:
- LNG feed gas demand
- Power generation growth
- Data centers
- Pipeline congestion and storage tightness
In other words, drilling is no longer the driver — it is the responder.
Producers are adjusting activity to meet downstream demand rather than expanding drilling programs for growth’s sake.
Permian Basin: Associated Gas, Not Gas Drilling
Kinder Morgan was explicit in how it views the Permian.
The Permian is primarily an oil basin — not a dry-gas play.
Gas volumes in the Permian are driven almost entirely by oil drilling, not natural gas prices or gas-directed rigs.
What this means:
- Gas supply remains durable even in weak gas-price environments
- Associated gas continues flowing as long as oil programs remain active
- Volumes are not dependent on a rebound in gas drilling
From Kinder Morgan’s perspective, this makes Permian gas structurally reliable rather than cyclical.
Even if gas rigs decline nationally, Permian associated gas continues to support:
- Processing plants
- Intrastate pipelines
- LNG feed gas takeaway
This is a critical distinction — and one reason Kinder Morgan views Permian gas as stable input supply for Gulf Coast LNG rather than speculative growth volume.
Kinder Morgan, Inc
Haynesville: Fewer Rigs, Higher Throughput
The Haynesville remains one of Kinder Morgan’s most important gas basins, but the company did not attribute recent growth to higher drilling activity.
Instead, management highlighted:
- Strong producer ramp-ups
- High-intensity completions
- Infrastructure utilization
The system set a daily throughput record of 1.97 Bcf/d in late December 2025.
Notably absent from the discussion:
- No mention of rising rig counts
- No drilling acceleration commentary
- No producer capex expansion forecasts
Kinder Morgan’s takeaway is that modern Haynesville productivity allows meaningful volume growth without materially higher drilling activity.
Efficiency, not rig count, is carrying supply growth.
Kinder Morgan, Inc
Eagle Ford: Mature but Strategically Relevant
While not discussed at length, the Eagle Ford was referenced as part of the broader Texas intrastate system strength.
Kinder Morgan pointed to:
- Strong intrastate market performance
- Tight pipeline conditions
- Demand-driven volatility creating upside
The implication is that Eagle Ford drilling activity is stable but not expanding, with production sustained by:
- Existing inventory
- High-return core acreage
- Proximity to LNG export markets
The basin’s importance lies less in growth drilling and more in its location within the LNG supply corridor.
Bakken: Drilling Pullback Acknowledged — Impact Limited
Kinder Morgan directly addressed slowing drilling activity in the Bakken, including Continental Resources’ decision to reduce activity.
Management acknowledged:
- Lower basin activity
- Reduced drilling momentum
However, they characterized the financial impact as minimal:
- Bakken contributes only ~3% of Kinder Morgan’s total EBITDA
- Volumes entering 2026 were stronger than expected
- Producers are expected to continue completing wells through mid-2026
- Increasing gas-oil ratios (GORs) partially offset lower drilling levels
The message was clear:
Bakken drilling volatility does not materially affect Kinder Morgan’s outlook.
Kinder Morgan, Inc
Northeast (Marcellus / Utica): Infrastructure-Constrained, Not Drill-Constrained
In the Northeast, Kinder Morgan emphasized:
- Strong interstate pipeline utilization
- Storage-driven volatility
- Demand dislocations creating upside
There was no suggestion that higher drilling activity is required to grow volumes.
Instead, Kinder Morgan described a system that is:
- Capacity constrained
- Highly sensitive to weather
- Responsive to LNG and power demand swings
Once again, drilling activity was not positioned as the bottleneck — infrastructure was.
What Kinder Morgan Did Not Say About Drilling
Equally important is what was missing from the call.
Kinder Morgan did not:
- Forecast a U.S. rig count recovery
- Predict a shale drilling rebound
- Tie growth to E&P capex increases
- Reference higher drilling budgets
- Signal producer-led volume expansion
This absence reinforces a central theme:
Midstream growth is no longer tied to upstream growth.
The Strategic Shift: From Rig-Driven to Demand-Driven
Kinder Morgan’s comments reflect a structural change in the U.S. energy system.
Old shale model:
- Drilling growth → supply → midstream demand
New infrastructure model:
- LNG & power demand → pipeline pull → producer response
In this framework:
- Drilling becomes tactical, not strategic
- Volume reliability matters more than growth
- Long-term contracts outweigh short-term activity cycles
This is why Kinder Morgan repeatedly emphasized:
- Take-or-pay contracts
- Investment-grade counterparties
- Long-dated LNG and utility demand
Bottom Line
Kinder Morgan’s message on U.S. drilling activity is nuanced but unmistakable:
- Permian: Associated gas provides durability, not growth risk
- Haynesville: Productivity replaces rig count growth
- Eagle Ford: Stable, infrastructure-advantaged supply
- Bakken: Declining drilling, immaterial financial exposure
- Northeast: Pipeline and storage constraints matter more than rigs
The company is positioning itself for a future where:
U.S. drilling activity can remain flat — and midstream earnings can still grow.
That marks one of the clearest signals yet that North American energy has entered a new phase — one driven by infrastructure utilization, LNG exports, and power demand, not by chasing the next drilling boom.
