In 2026, ADI expects demand growth to drive the midstream sector as opposed to supply growth. At the same time, disciplined capital allocation strategies will reshape how infrastructure is developed, optimized, and valued. Exhibit 1 summarizes our growth expectations in midstream oil and gas, and we share below 10 key insights on what to expect in 2026.
Exhibit 1. Midstream oil & gas growth landscape in 2026.
1. Demand will be the primary driver for natural gas infrastructure
The natural gas midstream sector in 2026 is defined by an urgent demand-pull dynamic that contrasts sharply with prior supply-driven cycles. The simultaneous ramp-up of LNG feedgas requirements—adding more than 10 Bcf/d of incremental demand between 2025 and 2027—and the accelerating call on gas-fired power generation driven by data centers and electrification are directing capital toward last-mile connectivity, storage flexibility, and incremental processing capacity. Data center-related power demand alone is expected to add several gigawatts of incremental load, translating into 3–5 Bcf/d of new gas demand by the latter half of the decade. Operators are increasingly prioritizing projects that directly serve power and LNG demand, with gas-focused backlogs representing the majority of sanctioned growth capital. Price signals reinforce this shift, as structurally higher demand supports a firmer gas price environment through 2026, with Henry Hub increasingly clearing above marginal supply costs.
2. Permian basin gas egress constraints will progress but later in the year
The pipeline bottlenecks that pushed Permian gas prices into extreme discounts during 2024–2025—at times exceeding $2.00/MMBtu below Henry Hub—are expected to ease meaningfully in the second half of 2026. A series of major greenfield pipelines totaling more than 4 Bcf/d of new capacity, combined with interim brownfield expansions adding several hundred MMcf/d, will add substantial takeaway capacity from the basin to Gulf Coast markets. This infrastructure wave should relieve pressure at Waha, reduce the risk of associated gas-driven crude curtailments that threatened up to 500 Mbbl/d of oil production at peak constraint, and restore more normalized regional pricing dynamics by late 2026.
3. Capital allocation shifts to “singles and doubles”
Capital allocation will likely move away from megaprojects towards optimization of existing assets. This “singles and doubles” strategy emphasizes smaller, lower-risk projects that leverage existing rights-of-way and facilities—such as compression, looping, and debottlenecking—to meet immediate demand. Typical project sizes range from $100 million to $500 million, with build multiples often below 6x EBITDA and construction timelines measured in months rather than years. These projects offer faster timelines, lower permitting risk, and attractive returns, enabling operators to grow earnings and cash flow without stretching balance sheets or execution capacity.
4. Crude oil oversupply contrasts with tightening NGL markets
Commodity fundamentals will diverge sharply in 2026. Crude oil markets face the risk of oversupply as global production growth outpaces demand by an estimated 3–4 million barrels per day, placing downward pressure on prices unless inventory builds become visible. In contrast, NGL markets are tightening structurally. Slower oil-directed drilling is constraining NGL supply growth, particularly in liquids-rich basins, while rising exports and new domestic demand—especially for ethane—are improving pricing and utilization across NGL value chains. Ethane exports are expected to exceed 500 Mbbl/d, while new petrochemical and industrial demand adds incremental pull late in 2026.
5. NGL export infrastructure is likely overbuilt
The year 2026 represents a peak commissioning cycle for NGL export infrastructure. Major expansions across the U.S. Gulf Coast are coming online, materially increasing ethane, propane, and LPG export capacity by several hundred thousand barrels per day. With this build-out largely complete, utilization rather than capacity additions becomes the key variable. The strategic focus is shifting toward asset optimization—flexibility between products, reliability, and pipeline conversions that unlock new supply basins. Export terminals and associated pipelines are becoming increasingly central to global NGL arbitrage, but competition for barrels is intensifying.
6. Canadian midstream resets in a post-TMX landscape
Canada’s midstream sector enters a new phase following the full commercial ramp-up of the Trans Mountain Expansion. The transportation premium driven by pipeline scarcity has largely evaporated, with differentials narrowing and increasingly determined by crude quality rather than access. The WCS differential is expected to stabilize in the mid-single-digit dollar range under normal market conditions. At the same time, a new policy framework has emerged for future large-scale infrastructure, including the potential for another major export pipeline with capacity measured in excess of 1 million barrels per day. The focus in 2026 shifts from scarcity rents to optimization, quality differentials, and long-dated strategic optionality.
7. Mexico’s gas infrastructure matures through power integration
Mexico’s natural gas network has reached a maturation point, anchored by large-scale pipelines integrated with state-led power generation goals. Fully operational cross-border and in-country systems are now supplying more than 1 Bcf/d of incremental gas volumes to central and southern Mexico, underpinning long-term, contracted cash flows. Looking ahead, government plans to add roughly 8 GW of new gas-fired generation by the end of the decade position existing pipelines as critical enablers of Mexico’s energy transition and grid reliability.
8. Gas storage assets undergo a valuation reset
Natural gas storage has been structurally repriced as LNG exports and renewable intermittency increase volatility and balancing requirements. High-deliverability storage—particularly salt caverns near the Gulf Coast—is now viewed as critical infrastructure rather than optional capacity. Contract pricing for new storage has reset higher, commonly in the $0.20–$0.30 per Mcf per month range, with premium assets clearing above that level. New investments are increasingly justified by grid reliability and LNG support rather than purely seasonal arbitrage.
9. West Coast refined products face acute supply stress
The most acute infrastructure stress point in 2026 is refined products on the U.S. West Coast. Refinery closures are creating a gasoline supply deficit estimated at more than 200 Mbbl/d, with no near-term pipeline solution. While new long-haul pipeline proposals are advancing, their timelines extend well beyond 2026. As a result, the region will rely heavily on waterborne imports, increasing price volatility, widening crack spreads, and tightening logistics across marine terminals and Jones Act tanker availability.
10. Consolidation accelerates around wellhead-to-water integration
Midstream consolidation in 2026 is increasingly driven by the imperative to secure integrated wellhead-to-water value chains. Large-cap players are favoring tuck-in acquisitions that extend networks, capture synergies, and enhance free cash flow rather than transformative mergers. Recent transactions typically clear at 6–8x EBITDA, are immediately accretive, and are structured to improve asset connectivity rather than add standalone risk. The emphasis remains on disciplined growth, balance sheet strength, and cash flow durability.
Taken together, these ten insights highlight 2026 as a maturation phase for the midstream sector. Infrastructure built during the prior cycle is reaching full utilization just as companies pivot toward disciplined, cash-flow-focused growth. Structural demand growth—led by natural gas, LNG exports, and power generation—coexists with a more cautious crude oil backdrop. Against a shifting macroeconomic and geopolitical landscape, the sector is increasingly defined by strategic asset optimization, regulatory clarity, and integrated value chains that support sustained value creation across North American energy infrastructure.
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ADI is a prestigious, boutique consulting firm specializing in oil and gas, energy, and chemicals since 2009. We bring deep expertise in a broad range of markets where we support Fortune 500, mid-sized and early-stage companies, and investors with consulting services, research reports, and data and analytics, with the goal of delivering actionable outcomes to help our clients achieve tangible results.
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