What is the Houston Ship Channel gas hub?

curl -H "Authorization: Token YOUR_KEY" \
  "https://api.oilpriceapi.com/v1/prices/past_year?by_code=NATURAL_GAS_HSC_USD&interval=daily"

Where is the Houston Ship Channel hub?

EIA places it in southeastern Texas in the Port of Houston, surrounded by natural gas and processing plants along the Gulf Coast. Buyers there include export markets, industrial and process gas users, and power generators, and EIA describes the market as diverse, with price transparency and liquidity for all three. The nearby Eagle Ford shale produced about 6% of all U.S. marketed natural gas in 2023, and growth in LNG exports, gas liquids processing and pipeline exports to Mexico have all added to the hub's importance (EIA, October 2024).

HSC therefore draws on two supply regions: the nearby Eagle Ford, and the Permian Basin through the long-haul pipelines from Waha. In 2022 Permian gas production rose 15% to a record 21.2 Bcf/d, and Eagle Ford production rose 14%, adding 0.8 Bcf/d (EIA).

HSC is one of close to 200 pricing hubs in the integrated North American market (EIA). Henry Hub, in Erath, Louisiana, is the delivery point for the NYMEX futures contract and the benchmark that regional hubs such as HSC are quoted against, as a basis in dollars per MMBtu. EIA attributes Henry Hub's role to pipeline interconnectivity, proximity to storage and production, access to diverse markets, and a large number of buyers and sellers. When Texas supply and demand are balanced, HSC trades close to it: in the first half of 2023 the average gap was $0.27/MMBtu (EIA).

How does Permian gas reach Houston?

Through intrastate pipelines built east from the Waha hub. In 2021 about 8.5 Bcf/d of new natural gas pipeline capacity entered service in Texas, and EIA counts 4.1 Bcf/d of it as letting Permian producers deliver more gas to consuming regions along the Gulf Coast. Kinder Morgan's 2.1 Bcf/d Permian Highway Pipeline, in service since January 2021, runs from Waha to Katy, near the Texas Gulf Coast. Matterhorn Express added 2.5 Bcf/d from the Permian to demand centers on the Texas coast in October 2024 (EIA).

Those pipelines tie the two hubs together: when Permian supply reaches the coast faster than Gulf Coast demand grows, the surplus shows up at HSC, as it did in 2022. The price of gas leaving the basin is covered in what is the Waha hub, and the periods when it falls below zero in why Waha prices go negative.

What happened to HSC when Freeport LNG shut down?

The clearest recent example is the Freeport LNG outage. The Texas export terminal shut down in June 2022 and returned to service in February 2023 (EIA). New pipeline capacity from the Permian kept delivering gas to East Texas while the terminal was offline, and EIA found that the combination left more supply than demand in the East Texas market.

• November 2022: HSC averaged $1.27/MMBtu below Henry Hub (EIA).
• December 2022: Waha, upstream, averaged $3.02/MMBtu below Henry Hub (EIA).
• First half of 2023: HSC's discount narrowed to an average of $0.27/MMBtu and Waha's to $0.85 (EIA).

EIA gave three reasons for the narrowing: Freeport LNG returned to service in February 2023, El Paso Natural Gas restarted its Line 2000 the same month, and production grew more slowly than in 2022. For anyone modelling HSC basis, the episode shows that one export terminal going offline moved the hub's discount by about a dollar while the pipelines feeding it kept running, and that Waha and HSC widened together because the same gas was trying to reach the same coast.

Why are there two HSC prices?

More than one price-reporting methodology assesses Houston Ship Channel, and they do not print the same number. OilPriceAPI carries two of them as separate series rather than blending them:

• NATURAL_GAS_HSC_USD: a daily index labelled by the trade date, built from deals done that day. It is published after the U.S. trading day closes.
• NATURAL_GAS_HSC_DAY_AHEAD_USD: a day-ahead index labelled by the gas day on which the gas is delivered. It is available on weekday mornings Eastern time, hours before the first series.

The two surveys capture different confirmed trades and label them by different dates, so on the same gas day they can differ by up to about 15%. Neither is wrong. Use the day-ahead series for decisions that need a number before the close; use NATURAL_GAS_HSC_USD when you are comparing Houston with other hubs carried on the same daily basis, and never splice one series into the other.

What to watch

• LNG terminal outages and start-ups on the Texas coast, which moved HSC basis by about a dollar in 2022 and 2023 (EIA).
• Permian takeaway additions, which deliver more gas to the Gulf Coast and can weaken HSC while strengthening Waha.
• Pipeline exports to Mexico and petrochemical demand, both cited by EIA as sources of the hub's growth.

Using the data

NATURAL_GAS_HSC_USD is in US dollars per MMBtu, daily on trading days. For the HSC basis, subtract NATURAL_GAS_USD (Henry Hub) on the dates both series report, as the exhibit above does. For the spread Permian producers earn by moving gas to Houston, pair it with NATURAL_GAS_WAHA on shared dates. Other regional hubs are compared on the natural gas hubs overview.