Energy Transfer to Build $5.3 Billion Permian Gas Pipeline to Supply Southwest

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Energy Transfer announced Aug. 6 that it has approved a $5.3 billion expansion of its Transwestern Pipeline, aiming to boost natural gas deliveries from the Permian Basin to fast-growing markets in Arizona and New Mexico.

The Desert Southwest expansion will add 516 miles of 42-inch pipeline and nine compressor stations across Arizona, New Mexico and Texas. Once complete, the system will have the capacity to transport 1.5 billion cubic feet of natural gas per day (Bcf/d).

“This project 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,” Energy Transfer said.

The pipeline is scheduled to enter service in the fourth quarter of 2029 and builds on Transwestern’s decades-long presence in the region since it began operating in 1960.

Energy Transfer said the project is backed by significant long-term commitments from investment-grade customers. An open season is planned later this quarter to secure additional shippers, and the company expects the remaining capacity to be fully subscribed. The system could be expanded further depending on open season results.

The project also includes $600 million in Allowance for Funds Used During Construction (AFUDC). Energy Transfer expects to use U.S. steel and employ up to 5,000 workers, including union labor, during construction.

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