Energy Transfer Upsizes Transwestern Pipeline Expansion to 2.3 Bcf/d to Meet Permian Gas Demand

Energy Transfer Boosts Transwestern Capacity for Southwest Gas Delivery

Energy Transfer LP (ET) is significantly increasing the scope of its Transwestern Pipeline’s Desert Southwest expansion project, a move designed to capitalize on the robust natural gas production emanating from the Permian Basin. The company announced plans to widen the pipeline to 48 inches, which will lift the total transportation capacity to a substantial 2.3 billion cubic feet per day (Bcf/d).

The announcement, made on December 18, 2025, signals a clear focus by the midstream giant on expanding its core pipeline infrastructure to serve high-growth regions. The Transwestern Pipeline is strategically positioned to move Permian gas supplies directly to markets in Arizona and New Mexico, where demand for natural gas, particularly for power generation, continues to rise.

Strategic Pivot to Pipeline Infrastructure

This expansion comes amid a broader strategic shift within Energy Transfer, which appears to be prioritizing domestic pipeline development over certain large-scale export projects. The company has recently signaled a pivot away from some liquefied natural gas (LNG) ventures, such as the suspension of its Lake Charles LNG project, to focus capital expenditure on essential gas transportation networks.

The Permian Basin, spanning parts of Texas and New Mexico, remains the most prolific oil and gas producing region in the United States. However, takeaway capacity—the ability to move gas out of the basin—has been a persistent bottleneck. Projects like the Transwestern expansion are critical for maintaining the economic viability of Permian production and ensuring stable supply to downstream markets.

Market Implications and Regulatory Environment

The decision to upsize the project reflects confidence in sustained long-term demand for natural gas in the U.S. Southwest. Increased pipeline capacity helps stabilize regional gas prices by alleviating congestion and providing producers with more reliable access to end-users.

Furthermore, the timing of the announcement aligns with a favorable regulatory environment aimed at expediting energy infrastructure. Legislative efforts, such as the House-passed SPEED Act, are designed to fast-track federal approvals for energy projects. While the Transwestern expansion is a commercial decision by ET, the supportive regulatory backdrop likely reduces execution risk for such large-scale infrastructure developments.

• The Transwestern Pipeline will be widened to 48 inches.
• The expanded capacity will transport 2.3 Bcf/d of natural gas.
• The primary source of gas is the Permian Basin.
• The destination markets include Arizona and New Mexico.

The expansion of the Transwestern Pipeline is a direct response to the overwhelming supply growth in the Permian and the increasing energy needs of the Desert Southwest. This infrastructure is vital for balancing the domestic energy market.

Forward Outlook for Energy Transfer (ET)

For Energy Transfer, investing in high-demand pipeline corridors like the Transwestern route strengthens its position as a dominant midstream operator. These projects typically offer long-term, fee-based revenue streams, providing stable cash flows that are highly valued by investors. The successful completion of the Desert Southwest expansion will enhance ET's integrated network, connecting supply from the Permian to key consumption hubs and potentially increasing the utilization rates across its existing system.

The company's focus on gas pipeline infrastructure suggests a strategic commitment to the domestic natural gas market, which is expected to remain robust due to its role in electricity generation and industrial processes, even as the energy transition progresses.