Energy Transfer expands Desert Southwest pipeline project

By Global Infrastructure Sherpa · Feb 26, 2026

Development Transmission announced United States Feb 26, 2026

USD5.6B

Deal Value

2.3 Bcf/d

Capacity

development

Stage

Transwestern Desert Southwest pipeline

Project

Energy Transfer is expanding the Desert Southwest pipeline project to increase natural gas transportation capabilities from the Permian Basin to Arizona and New Mexico, increasing the pipeline diameter from 42 to 48 inches, with a potential capacity increase to 2.3 Bcf/d. The project costs are estimated at $5.6 billion, and major utilities and cooperative companies in the region, including APS, SRP, and AZ G & T Cooperative, have expressed their support for the expansion.

Deal Analysis

Energy Transfer's $5.6 billion expansion of the Desert Southwest pipeline project signifies a major investment in natural gas infrastructure, aimed at bolstering transportation capacity from the Permian Basin to Arizona and New Mexico. Increasing the pipeline diameter from 42 to 48 inches allows for a potential capacity increase to 2.3 Bcf/d, addressing growing energy demands in the region. The project's support from key regional utilities and cooperative companies, including APS, SRP, and AZ G & T Cooperative, underscores its strategic importance for energy security and reliability in the Desert Southwest. This development highlights the continued reliance on natural gas as a crucial energy source, particularly in regions experiencing population and economic growth. The involvement of Energy Transfer, a major player in energy infrastructure, lends credibility to the project's feasibility and long-term viability. The expansion aims to alleviate potential bottlenecks in natural gas supply, ensuring a stable and affordable energy supply for consumers and businesses in Arizona and New Mexico. The project's scale and the backing of prominent regional energy providers suggest a strong commitment to meeting the evolving energy needs of the Desert Southwest.

Project value estimated at $5.6 billion.
Expansion increases pipeline capacity to 2.3 Bcf/d.
Energy Transfer is the developer, a major player in energy infrastructure.
Key regional utilities (APS, SRP, AZ G & T Cooperative) support the project.

Market Context: The deal occurs within the context of increasing demand for natural gas in the Desert Southwest region of the United States, driven by population and economic growth. The Permian Basin is a major source of natural gas, and pipeline infrastructure is crucial for transporting this resource to consumers.

Source Intelligence

KEY DETAILS

The expansion will increase Energy Transfer's 2026 Growth Capital Spending by approximately $200 million: "Energy Transfer now estimates the project costs to be approximately $5.6 billion (AFUDC excluded), which is estimated to increase their 2026 Growth Capital Spending by approximately $200 million."

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Deal Size

Energy Transfer now estimates the project costs to be approximately $5.6 billion (AFUDC excluded)

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Capacity

Increasing the diameter of the pipeline has changed the size of the project, allowing the potential capacity to be increased to as high as 2.3 Bcf/d, pending the final compression design configuration.

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Location

One exception is taking place in the Southwest – an indication of how fast demand is outpacing forecasts.

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Announcement

Energy Transfer moves to expand the scope of the Transwestern Desert Southwest pipeline upgrade by Kyle February 25, 2026

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COD

Energy Transfer still anticipates the expanded pipeline will begin operations in Q4 2029

PARTIES MENTIONED IN SOURCE

Energy Transfer developer

"Energy Transfer moves to expand the scope of the Transwestern Desert Southwest pipeline upgrade"

APS null

"Major utilities and cooperative companies in the region, including APS, SRP, and AZ G & T Cooperative, have publicly expressed their support for the expansion"

SRP null

"Major utilities and cooperative companies in the region, including APS, SRP, and AZ G & T Cooperative, have publicly expressed their support for the expansion"

AZ G & T Cooperative null

"Major utilities and cooperative companies in the region, including APS, SRP, and AZ G & T Cooperative, have publicly expressed their support for the expansion"

high quality Enriched Feb 26, 2026