Energy Transfer LP has announced a positive financial investment decision for the expansion of its Transwestern Pipeline, aimed at increasing natural gas supply to markets throughout Arizona and New Mexico from the company’s asset base in the Permian Basin.
The Desert Southwest pipeline expansion project will comprise 516 miles of 42-inch pipeline and nine compressor stations across Arizona, New Mexico, and Texas. The system has been designed with a capacity of 1.5 billion cubic feet per day and is expected to enter service by the fourth quarter of 2029.
The strategic expansion extends Transwestern’s natural gas pipeline network, enhancing system reliability whilst providing additional supply options to serve rapidly growing demand in the Southwestern United States region. The project builds upon Transwestern Pipeline’s operational history in the region, which dates back to 1960.
The project carries an estimated cost of approximately $5.3 billion, including $0.6 billion of Allowance for Funds Used During Construction (AFUDC). The expansion is supported by significant long-term commitments from investment-grade customers, providing a stable foundation for the investment.
Energy Transfer plans to launch an open season later this quarter and anticipates that remaining capacity will be fully subscribed upon completion of the open season process. Depending on final open season results, the project could be efficiently expanded to accommodate additional demand.
The expansion is designed to promote American industry through prioritising US steel pipe manufacturers. The construction phase is expected to utilise up to 5,000 local workers and union labour for construction jobs, providing significant employment opportunities across the project’s geographic footprint.
The infrastructure development responds to growing energy demand driven by population growth, high-tech industry expansion, and data centre development throughout the region, positioning the pipeline to support long-term energy needs for utilities and energy providers.
Strategic Context
Energy Transfer operates assets across all major US supply basins and maintains an extensive natural gas pipeline network connecting to energy providers in most major markets, including nearly 200 natural gas-fired power plants nationwide. This broad supply reach and market access provide the partnership with capabilities to capitalise on opportunities for earnings growth and efficient network expansion.
Company Profile
Energy Transfer LP owns and operates one of the largest and most diversified portfolios of energy assets in the United States, encompassing approximately 140,000 miles of pipeline and associated energy infrastructure. The company’s strategic network spans 44 states with assets positioned across all major US production basins.
The publicly traded limited partnership’s core operations include complementary natural gas midstream, intrastate and interstate transportation and storage assets, crude oil, natural gas liquids and refined product transportation and terminalling assets, and NGL fractionation capabilities. Energy Transfer also owns Lake Charles LNG Company and maintains ownership interests in Sunoco LP and USA Compression Partners, LP.
For more information visit www.energytransfer.com
