The era of inexpensive Henry Hub natural gas is concluding, with prices projected to reach US$5/mmbtu (real) by 2035, a significant increase from the US$2–4/mmbtu range that characterized the past decade. This structural shift is driven by a confluence of sustained demand growth and increasingly challenging and expensive supply expansion.
This forecast signals a fundamental re-rating of North American natural gas, impacting investment decisions across the energy value chain from upstream production to LNG export facilities and power generation. The market must now contend with a new pricing paradigm where traditional supply elasticity is diminishing, demanding higher prices to incentivize new production.
Executive Summary
Wood Mackenzie's latest analysis indicates a profound change in the Henry Hub natural gas market, forecasting a rise to US$5/mmbtu (real) by 2035. This upward trajectory is attributed to robust demand, particularly from the power sector and burgeoning AI-driven data centers, which are expected to add 17 bcfd of gas demand by the mid-2030s. Concurrently, the cost and difficulty of increasing supply are escalating, as the contribution of low-cost associated gas declines, necessitating higher prices to stimulate dedicated gas production.
What Happened
Wood Mackenzie recently released a report, "Defying gravity: why US Henry Hub natural gas prices are set to rise," outlining its revised long-term price forecast. The report, published on July 2, 2026, details how two structural shifts—persistent demand growth and more challenging supply expansion—are converging to push Henry Hub prices higher.
Key Developments
- Price Shift: Henry Hub natural gas prices are forecast to approach US$5/mmbtu (real) by 2035, up from the US$2–4/mmbtu range of the last decade.
- Demand Drivers: The power sector, fueled by AI-driven data center growth, is the primary source of new US gas demand, projected to add 17 bcfd by the mid-2030s.
- LNG Export Growth: US LNG export capacity is set to more than double, with the nation becoming over one-third of global LNG supply in the early 2030s.
- Supply Constraints: Associated gas, historically a low-cost supply source, will account for less than 20% of future US gas supply growth, increasing reliance on more expensive dedicated gas production.
Regional Context
The projected rise in Henry Hub prices underscores the increasing integration of the North American gas market with global LNG dynamics, as the U.S. solidifies its position as a major international supplier. This shift also highlights the evolving energy landscape within the Americas, where domestic demand, particularly from the power sector, is competing with export opportunities.
Market Impact
Traders and analysts should anticipate increased volatility and a higher floor for Henry Hub prices, necessitating adjustments in hedging strategies and long-term contract valuations. Refiners and industrial consumers reliant on natural gas will face elevated input costs, potentially impacting margins and investment decisions in gas-intensive operations. The growing US LNG export capacity will continue to link domestic prices more closely to international gas benchmarks, influencing global energy trade flows.
Outlook
Market participants should closely monitor the pace of AI-driven data center development and the final investment decisions for new LNG export projects, as these will be critical determinants of future demand. The responsiveness of dedicated gas producers to higher price signals will also be key to understanding the trajectory of US natural gas supply in the coming years.
