Why is Waha gas so cheap?

The Permian Basin is the most prolific oilfield in America, and its natural gas has repeatedly sold for less than nothing. Prices at the Waha hub — West Texas's gas pricing point — have traded near or below zero again and again, with producers paying to have their gas taken away. That isn't a malfunction. It's structural, and it's the cheapest large-scale energy opportunity in the country.

Gas nobody drilled for

Permian producers drill for oil. Gas comes up with it whether anyone wants it or not — associated gas, a byproduct. That means Permian gas supply grows with oil economics, not gas economics: even when gas prices collapse, the gas keeps coming, because stopping it would mean stopping the oil.

The pipeline bottleneck

Gas only has value if it can reach a buyer, and pipelines out of the basin are finite. When production outruns takeaway capacity, the marginal molecule has nowhere to go. The local price at Waha disconnects from the national benchmark at Henry Hub and falls until somebody is willing to absorb the surplus — which is how a price goes negative: the pipeline space is worth more than the gas in it.

What happens to the stranded molecules

A producer holding gas that can't reach market has three bad options: shut in production (and lose the oil revenue with it), sell at a loss, or flare under permit — burning energy into the sky for nothing. Billions of cubic feet a day have cycled through those options in the Permian. It is the largest routine destruction of usable energy in the country.

The fourth option: consume it in-basin

The gas can't reach the market, but the market can come to the gas. Electricity generation built in the basin converts stranded molecules into a product that is in shortage: firm power. AI data centers need utility-scale blocks of it on timelines the grid can't meet. Build the generation and the data center together, behind the meter, on the same ground as the gas supply, and the Permian's cheapest liability becomes the AI buildout's scarcest input. That's the arbitrage: cheap molecules in, premium electrons out.

About Corley Energy

Corley Energy is a behind-the-meter independent power producer, founded in 2024 by Jake Corley, Tim Bozeman, and Mark Meyer. We convert stranded Permian Basin natural gas into firm, contracted electricity for AI data centers at Power Foundry, our ~1,000-acre development in Upton County, Texas. Start with what a power foundry is, see the company facts, or check current capacity on the Sites page.

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