The demand for natural gas in the United States market has reached a tipping point this year. New AI-driven data centers, along with the industrial applications that natural gas serves, have led Producers Midstream, a subsidiary of Tailwater Capital, to launch a new binding capacity open season for the company’s Palo Duro pipeline project in the iconic Permian Basin. The reality is that the US midstream market is growing and shows no signs of easing up or slowing down in 2026.
The Permian Basin: A region of tremendous energy potential, or a dying semblance of older energy processes?
The Permian Basin in Texas has become the cornerstone of the US domestic oil and gas market in recent years. The basin features a litany of existing pipelines, with a few new ones planned for the near future.
To further strengthen the Permian’s strategic importance, Producers Midstream launched a binding Open Season through its subsidiary, Palo Duro Pipeline, to solicit the interest and possible investments from international parties to develop the latest pipeline in the Permian.
The newly proposed Palo Duro Pipeline project aims to create a new path that will interconnect the Waha residue markets in the Permian Basin with the growing mid-continent residue markets in the Anadarko Basin.
“This Open Season marks a key milestone for the Palo Duro Pipeline and underscores our commitment to delivering scalable, market-responsive infrastructure. The pipeline’s unique interconnectivity and strategic positioning creates a much-needed additional outlet for constrained Permian gas, while also supporting the rapid growth of AI-driven power solutions and other emerging sources of demand.” – Matt Flory, Chief Executive Officer of Producers Midstream
Can Producers Midstream increase access to downstream markets through the new proposed pipeline?
To provide shipping companies with enhanced access and transportation potential, the proposed Palo Duro Pipeline will run from its origin point in Nolan County, Texas, and then connect to several existing interstate pipelines, including:
- NNG Pipeline
- Transwestern Pipeline
- NGPL Pipeline
- ANR Pipeline
- PEPL Pipeline
- EGT Pipeline
- Southern Star Pipeline
The company has noted the strategic importance of the proposed Palo Duro Pipeline as the high-pressure pipeline will connect vital downstream pipelines that deliver vast amounts of energy from the Permian basin.
It’s worth mentioning that Producers Midstream is not planning to construct any new facilities as part of the Palo Duro development, and is instead focused on converting its interstate service pipeline, which extends roughly 275-miles from Nolan County to Wheeler in Texas.
Notably, Producers Midstream is targeting an in-service date early in the first quarter of 2026. To allow the pipeline to traverse several states as part of its roadmap, the company is preparing to file an application with the FERC under Section 7(c) of the Natural Gas Act.
As the US natural gas market grows in 2026, developing new pipelines that are not limited to one specific market in the US has become a top priority for the nation if it aims to meet the expectations of the current administration. On that note, two lawyers associated with the President have recently been in Bosnia to assess the potential of a new pipeline investment in Europe.
The rapid acceleration of the US gas market will require significant investment capital
As the Palo Duro Pipeline becomes an actual reality this year, several US energy firms have outlined plans to invest heavily in the US gas market this year. Energy Transfer, a major pipeline operator in the US, has recently outlined its $5.5 billion natural gas investment this year. With the current demand for natural gas and LNG skyrocketing, the United States is perfectly positioned to lead the global energy production market in 2026.
