Energy Transfer LP announced plans to construct a $5.3 billion natural gas pipeline from the Permian Basin to markets in Arizona and New Mexico aiming to alleviate long-standing bottlenecks for gas producers in the region. The project is scheduled to begin operations by late 2029.
The new pipeline will expand the company’s existing Transwestern Pipeline network and is expected to transport up to 1.5 billion cubic feet of gas per day. According to a company statement, more than 500 miles of 42-inch pipeline will be laid, along with nine new compressor stations across Texas, New Mexico, and Arizona.
Energy Transfer said it has already secured shipping commitments from unnamed customers, providing a strong commercial foundation for the project.
Following the news, fellow energy company Kinder Morgan, shares dropped as much as 4.6%, the steepest decline in the S&P 500 Energy Index that day. Meanwhile, Energy Transfer shares rose 1.8% to $18.06 in morning trading in New York.
The pipeline is a response to infrastructure constraints in the Permian Basin, where booming shale oil production has led to surpluses of associated natural gas. In extreme cases, local gas prices have dipped into negative territory due to insufficient pipeline takeaway capacity.
Energy Transfer’s expansion is one of the largest new gas transport projects targeting the Southwest and could significantly alter competitive dynamics in regional midstream markets.
It also reflects a broader trend of infrastructure investment tied to the growing energy demand in the Western U.S. and Mexico.
