Glenn Hegar
Texas Comptroller of Public Accounts
Glenn Hegar
Texas Comptroller of Public Accounts
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Glenn Hegar
Texas Comptroller of Public Accounts
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Texas Comptroller Energy Tour: Natural Gas Overview

Natural Gas Snapshot | Print Snapshot (PDF)


Texas has long been a leader in the energy industry; its abundance of fossil fuels and renewable sources generate electricity for the state and make substantial contributions to the Texas economy. Texas’ energy use is tied to its large population, hot climate and extensive industrial sector, and the state depends on reliable and affordable energy. One important source of energy for the state is natural gas.


Natural gas is a hydrocarbon gas mixture primarily composed of methane (CH4) and formed from the decay of organic matter over millions of years. It is often found in conjunction with oil deposits. Due to lower levels of pollutants and greenhouse gases emitted when combusted for energy generation, natural gas is considered a cleaner-burning fossil fuel compared to coal and oil.

Today, the United States is the world’s largest producer of natural gas. Natural gas supplies about a third of the United States’ primary energy consumption, with primary uses being heating and generating electricity.1 While the majority of natural gas is delivered in its gaseous form via pipeline in the United States, the growth in the international market has given rise to the use of natural gas in a liquefied form, or LNG. LNG is a form of natural gas that has been cooled to a very low temperature (-162 degrees Celsius or -260 degrees Fahrenheit) to convert it into a liquid state. The process of liquefaction reduces the volume about 600 times, making it easier to store and transport.2

Natural Gas in Texas Energy

According to ERCOT, natural gas provides 41.8 percent of the electric-generating capacity in Texas, making it the largest single source of power in the state.3 Natural gas-fired power plants use combustion turbines or combined cycle technology to convert the energy of natural gas into electricity efficiently. The combustion produces a high temperature, high pressure gas stream that enters and expands through the turbine section. As hot combustion gas expands through the turbine, it spins the rotating blades.

The state's natural gas-fired power plants play a crucial role in meeting peak electricity demand and ensuring grid reliability. In Texas, there are at least 176 natural gas processing plants.4

One example of a recent opening of a natural gas-fired power plant is the Montgomery County Power Station, located in the city of Willis and opened in 2021. Montgomery County Power Station has an installed capacity of 993 Megawatts (MW) and, along with other Entergy Texas, Inc.-owned facilities, provides electricity to more than 500,000 Texans.5 This state-of-the-art power station utilizes technology that provides more efficient power, with $2.1 billion in investment from Entergy Texas being used for infrastructure upgrades, including transmission and distribution upgrades. During construction of the Montgomery County Power Station, the site created 1,000 onsite employment positions as well as significant economic impact for the area. Currently, there are 29 active employee positions at MCPS. Additionally, Entergy Texas recently received approval from the Public Utility Commission (PUCT) for a 1,215 MW natural gas-fired power plant located in Bridge City, Texas. This plant will bring $1.8 billion in economic benefit to Southeast Texas along with 7,000 direct and indirect jobs. The Orange County Advanced Power Station (OCAPS) will go into service in 2026 and provide electricity to 230,000 homes.

Entergy Texas also operates the Spindletop storage facility, located near OCAPS, which allows for fuel to be stored and deployed when needed.

Texas accounts for 15 percent of the U.S. electric power sector's total natural gas consumption, which is more than any other state.6 According to ERCOT’s Annual Energy Forecast, energy consumption in Texas will increase by about 29 percent over the next 10 years (Exhibit 1).

Exhibit 1
Texas Energy Consumption Ten-Year Forecast, 2023-2032
Year Energy (MWh)*
2023 445,388,329
2024 464,983,035
2025 480,009,069
2026 494,259,922
2027 508,344,490
2028 516,425,159
2029 521,236,673
2030 527,020,023
2031 532,397,851
2032 538,741,674

Source: The Electric Reliability Council of Texas
*One thousand kilowatts of electricity generated per hour.

Natural gas generation in the past decade has been relatively steady. In 2021, natural gas produced 233 million MWh of generated energy. While this is 14 million MWh less than what was produced in 2020, it is still above the 226 million MWh average of natural gas generated over the past decade (Exhibit 2).

Exhibit 2 Annual Texas Natural Gas Generation (MWh in millions)
Annual Texas Natural Gas Generation (MWh in millions)
Year MW hours (in Millions)
2012 214
2013 204
2014 205
2015 238
2016 226
2017 205
2018 240
2019 256
2020 247
2021 233

Source: U.S. Energy Information Administration[7]

Natural Gas Production in Texas

If Texas were a country, it would be the third-largest natural gas producer in the world.8 Nearly a fourth of U.S. proved dry natural gas reserves and about 30 of the nation's 100 largest natural gas fields are located in Texas.9 The state's natural gas resources are primarily extracted from shale formations through a process called hydraulic fracturing or fracking. Shale gas formations like the Barnett-Woodford Shale, Eagle Ford Shale, Haynesville-Bossier Shale, and Barnett Shale. have contributed significantly to Texas' natural gas production. Each of the top 10 highest gas-producing counties in Texas are located on top of one of these shale formations (Exhibit 3).

Exhibit 3
Top 10 Texas Counties by Natural Gas Production, 2022
County Shale Formation Total MCF*
Reeves Barnett-Woodford 928,780,348
Webb Eagle Ford 907,729,255
Panola Haynesville-Bossier 764,014,865
Culberson Barnett-Woodford 456,123,664
Harrison Haynesville-Bossier 409,130,750
Loving Barnett-Woodford 354,457,807
Tarrant Barnett 312,277,490
La Salle Eagle Ford 244,128,082
San Augustine Haynesville-Bossier 228,478,277
Wise Barnett 165,017,890

Source: Texas Railroad Commission
*One thousand cubic feet

The Texas Railroad Commission (RRC) regulates natural gas production in the state, issuing permits and overseeing operations. According to its website, RRC’s statutory roles are to “prevent waste of the state's natural resources, to protect the correlative rights of different interest owners, to prevent pollution, and to provide safety in matters such as hydrogen sulfide.”10

Employment in the natural gas industry in Texas is significant, with thousands of jobs created in drilling, fuel production, electric power generation and related sectors. The industry provides valuable economic opportunities, particularly in areas with active natural gas exploration and production activities. According to the 2023 U.S. Energy and Employment Report, in 2022 the natural gas industry was responsible for 100,972 jobs in fuel employment across the state. This accounts for more than a third of all fuel employment in Texas. Texas also had 8,912 employees from the natural gas industry working in electric power generation, which puts it third behind wind and solar energy, respectively. 11 In total, this represents a nearly 20 percent increase in employment from 2021 to 2022.

According to Chmura, a labor and economic market research and software firm, the average wage for natural gas-related professions in 2022 is $179,227 for natural gas extraction workers; $117,515 for drilling oil and gas well workers; and $110,604 for workers in support activities for oil and gas operations. While wages vary by profession, the natural gas industry, as a whole, can be lucrative for its employees.


The natural gas industry in Texas has long been an economic powerhouse, playing a pivotal role in shaping the state's financial landscape. Understanding the economics of natural gas in Texas requires delving into its historical price trends, which have influenced revenue streams and economic activities. The Henry Hub natural gas prices are considered the U.S. benchmark because they are based on the actual supply and demand of natural gas as a stand-alone commodity (Exhibit 4).

Exhibit 4 Henry Hub Natural Gas Spot Price (Dollars per Million Btu*)
Henry Hub Natural Gas Spot Price (Dollars per Million Btu*)
Year Price (Dollars per Million Btu)
1997 $2.49
1998 $2.09
1999 $2.27
2000 $4.31
2001 $3.96
2002 $3.38
2003 $5.47
2004 $5.89
2005 $8.69
2006 $6.73
2007 $6.97
2008 $8.86
2009 $3.94
2010 $4.37
2011 $4.00
2012 $2.75
2013 $3.73
2014 $4.37
2015 $2.62
2016 $2.52
2017 $2.99
2018 $3.15
2019 $2.56
2020 $2.03
2021 $3.89
2022 $6.45

Source: U.S. Energy Information Administration

* Measured in British thermal units (Btu), a measurement of content as energy.

Prices experienced an upward trend during the early 2000s due to increased demand for natural gas in electricity generation and industrial applications but dropped back down in 2002 due to recessionary pressures. Supply constraints, increased demand and concerns about potential supply shortages caused the price to go back up in 2004. Hurricanes Katrina and Rita in 2005 disrupted production and transportation infrastructure, leading to price spikes.12 This continued for a few years until 2009 when prices fell as technological advancements, such as hydraulic fracking and horizontal drilling, enabled the rapid expansion of shale gas production.13 Prices experienced volatility for some time after due to shifts in demand. However, the shale gas revolution continued to impact prices, keeping them relatively low compared to previous decades. In 2020, the COVID-19 pandemic significantly impacted natural gas prices. The outbreak led to a severe demand shock, resulting in a sharp decline in prices.14 Since then, the natural gas market has begun to recover from the pandemic, and natural gas prices have rebounded with a $4 increase from 2020 to 2022.

As natural gas prices fluctuate over time, the tax revenue generated from the industry plays a crucial role in supporting Texas' economy. Taxes associated with natural gas production accounted for 5.8 percent of the total state tax revenue in 2022. 15 The Natural Gas Production tax, a severance tax, on its own resulted in a record high $4.4 billion in 2022.16 Other related taxes such as the oil well service tax, gas utility pipeline tax and ad valorem tax contribute to the state's financial resources as well. In addition to these taxes, the natural gas industry in Texas is subject to various regulatory fees that further contribute to the state's revenue. The Texas Commission on Environmental Quality (TCEQ) administers various fees for activities such as compressed natural gas training, exams and licenses. There are also oil-field cleanup regulatory fees related to natural gas operations that are imposed to ensure the responsible management and cleanup of drilling sites.

The industries of oil and gas extraction and support activities for mining contributed $161.9 billion to Texas’ gross domestic product in 2021, nearly 60 percent of the U.S. industry GDP. Though these industries comprised just 1.3 percent of total Texas jobs, they accounted for about 8 percent of state GDP in 2021.

Current Trends

Natural gas continues to be a dominant and growing source of energy in Texas. Several trends are shaping the natural gas industry in the state. Advances in drilling techniques, particularly hydraulic fracturing, have unlocked vast reserves of natural gas across shale formations in Texas. This has led to increased production, allowing the state to meet growing domestic and international demand.

In the chemical manufacturing sector, natural gas is used in various capacities throughout the production process, acting as an inexpensive feedstock to provide lower energy costs. Natural gas has reduced the total manufacturing costs for U.S. chemical companies by 8 percent, relative to their cost prior to the shale gas revolution. By 2025, new chemical manufacturing investment will generate $43 billion in additional chemical industry output and 182,000 permanent new jobs, adding nearly $14 billion in wages to the pockets of Texas workers.17

Currently, natural gas is transformed into LNG then shipped all over the world via Texas’ two commercially operating LNG export facilities. These facilities enable the export of liquefied natural gas to global markets, contributing to economic growth and strengthening Texas's position in the global energy trade. Texas has an additional three facilities under construction and five approved export facilities not yet under construction.18


The U.S. Energy Information Administration projects a 15 percent increase in natural gas production and a 152 percent increase in LNG exports from now until 2050 in its Annual Energy Outlook.19 This projection demonstrates the increasing global demand for natural gas coupled with the innovative development of LNG.

Texas' expanded role as a natural gas exporter has boosted its economic growth. Additionally, the rise of natural gas for power generation has enabled the transition toward a more sustainable energy future, aligning with broader environmental goals.

As Texas embraces the challenges and opportunities presented by the evolving energy landscape, the current trends surrounding natural gas indicate a continued and significant role for this versatile resource. With its abundant reserves, technological advancements and lower emissions profile, natural gas remains a crucial component of Texas' energy portfolio. As the state focuses on achieving a sustainable and balanced energy mix, the ongoing development and utilization of natural gas resources will play a pivotal role in ensuring a prosperous and environmentally responsible future for Texas' energy sector.

  1. U.S. Energy Information Administration, “U.S. energy facts explained,” (Last visited Aug. 14, 2023.)
  2. U.S. Department of Energy Office of Fossil Energy and Carbon Management. “Liquefied Natural Gas (LNG),” (Last visited Aug. 14, 2023.)
  3. Electricity Reliability Council of Texas, Fact Sheet (July 2023), (Last visited July 19, 2023.)
  4. U.S. Energy Information Administration, “U.S. Energy Atlas,” (Last visited Aug. 23, 2023.)
  5. Entergy Texas, Inc. “Montgomery County Power Station Achieves Commercial Operation,” (Last visited Aug. 23, 2023.)
  6. U.S. Energy Information Administration, “Natural Gas Consumption by End Use,” (Last visited Aug. 14, 2023.)
  7. U.S. Energy Information Administration, “EIA-923 Power Plant Operations Report, Net Generation by State by Type of Producers by Energy Source, 1990-2021,” (Last visited Aug. 21, 2023.)
  8. Texas Oil and Gas Association, “The Facts on Texas Natural Gas,” (Last visited July 19, 2023.)
  9. U.S. Energy Information Administration “Texas State Energy Profile,” (Last visited July 19, 2023.)
  10. Railroad Commission of Texas, “Oil & Gas,” (Last visited Aug. 14, 2023.)
  11. U.S. Department of Energy, U.S. Energy and Employment Report - 2023, (Last visited Aug. 9, 2023.)
  12. Congressional Research Service, “Oil and Gas Disruption from Hurricanes Katrina and Rita,” (Last visited Aug. 10, 2023.)
  13. U.S. Department of Energy, Office of Fossil Energy National Energy Technology Laboratory, Modern Shale Gas Development in the United States: A Primer, (Last visited Aug. 10, 2023.)
  14. International Energy Forum, The Impact of Covid-19 on Natural Gas Markets (May 2020), (Last visited Aug. 14, 2023.)
  15. Texas Comptroller of Public Accounts, Sources of Revenue (Jan. 2023), (Last visited Aug. 14, 2023.)
  16. Texas Comptroller of Public Accounts, Sources of Revenue (Jan. 2023), (Last visited Aug. 14, 2023.)
  17. Texans for Natural Gas, “Support Shale-Related Manufacturing,” (Last visited Aug. 14, 2023.)