Energy Transfer LP announced it has reached a positive financial investment decision (FID) for the expansion of its Transwestern Pipeline to increase the supply of natural gas to markets throughout Arizona and New Mexico from Energy Transfer’s premier asset base in the prolific Permian Basin.
Transwestern’s Desert Southwest pipeline expansion will provide reliable economic supplies of natural gas to support the long-term energy needs for utilities and energy providers in the region driven by population growth, high-tech industry demand and data center expansion.
The Desert Southwest pipeline expansion project consists of 516 miles of 42-inch pipeline and nine compressor stations in Arizona, New Mexico and Texas. The design capacity of the pipeline is 1.5 billion cubic feet per day (Bcf/d). The strategic system expansion extends Transwestern’s natural gas pipeline network, enhancing system reliability and providing additional optionality serving rapidly growing demand in the Southwestern U.S. region. The project is expected to be in-service by the fourth quarter of 2029 and builds on Transwestern Pipeline’s long history of serving the region since it started operations in 1960.
The project is expected to cost approximately $5.3 billion, including $600 million of Allowance for Funds Used During Construction (AFUDC), and is supported by significant long-term commitments from investment-grade customers. Energy Transfer will launch an open season later this quarter and expects the remaining capacity to be fully subscribed upon completion of the open season. Depending on the final results of the open season, the project could be efficiently expanded to accommodate additional demand.
The project promotes American industry by prioritizing U.S. steel pipe manufacturers, as well as the expectation to utilize up to 5,000 local workers and union labor construction jobs during the construction period.
Energy Transfer has assets across all major U.S. supply basins and operates an extensive natural gas pipeline network that connects to energy providers in most major markets, including nearly 200 natural gas-fired power plants nationwide. This broad supply reach and deep market access provide the partnership with unique benefits, enabling it to capitalize on opportunities to increase earnings and efficiently expand its industry-leading pipeline network.
