Wood Mackenzie expects the U.S. natural gas market to enter a new pricing cycle over the next decade, forecasting that Henry Hub prices could approach US$5/MMBtu (real) by 2035 as demand growth begins to outpace the industry’s ability to deliver low-cost supply. After more than a decade of relatively stable prices between US$2 and US$4 per million British thermal units (MMBtu), the research firm believes structural changes in both supply and demand are creating sustained upward pressure on the benchmark.
Demand growth is being driven by several long-term trends. Expanding liquefied natural gas (LNG) export capacity, increased industrial consumption, and rapidly rising electricity requirements from artificial intelligence (AI) and data centers are expected to significantly increase U.S. gas consumption. Wood Mackenzie projects power-sector demand alone could grow by approximately 17 billion cubic feet per day (Bcf/d) by the mid-2030s, while U.S. LNG export capacity continues to expand following a record number of final investment decisions in 2025 and additional project approvals in 2026.
On the supply side, the report notes that producers are increasingly developing lower-quality drilling inventory as premium acreage in major basins such as the Marcellus, Haynesville, and Permian matures. Productivity improvements from longer laterals and completion technologies are slowing, associated gas growth from oil drilling is expected to moderate, and publicly traded exploration and production (E&P) companies continue to prioritize capital discipline over production growth. These factors are expected to require higher gas prices to incentivize additional drilling and supply.
Wood Mackenzie also identifies several factors that could moderate future price increases, including stronger associated gas production from higher oil prices, new pipeline development, technological advances, or slower-than-expected AI-related power demand. However, its base case concludes that the market conditions responsible for prolonged low natural gas prices are gradually fading, positioning Henry Hub for a structurally higher pricing environment over the coming decade.
Industry Impact
A sustained increase in Henry Hub prices would affect the entire North American energy value chain, supporting stronger economics for natural gas producers while increasing opportunities for drilling contractors, oilfield service companies, pipeline operators, LNG developers, and infrastructure suppliers as investment shifts toward meeting long-term gas demand growth.
Author: phinds