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Energy Transfer to Expand Transwestern Pipelines for Southwest Growth
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Key Takeaways
ET to expand the Transwestern Desert Southwest project, raising capacity using larger 48-inch pipelines.
Natural gas demand in Arizona and New Mexico is rising due to population growth and data center development.
The project's estimated total cost is $5.6 billion, supported by long-term shipping contracts.
Energy Transfer LP (ET - Free Report) announced plans to expand the Transwestern Pipeline as part of its Desert Southwest expansion project. The company will increase the pipeline diameter to 48 inches from 42 inches, boosting the project’s capacity to up to 2.3 billion cubic feet (Bcf) of natural gas per day.
With this project, the company will efficiently transfer natural gas from its premier asset base in the prolific Permian Basin.
The increase in pipeline diameter is primarily aimed at meeting rising energy demand in Arizona and New Mexico. Natural gas demand in these regions is growing due to population expansion, data center development, and increased utility requirements. In addition, the potential conversion of power plants from coal to natural gas could further boost regional gas demand.
The upsized project is expected to cost nearly $5.6 billion, excluding the allowance for funds used during construction. As a result, Energy Transfer’s total growth capital expenditures for 2026 are expected to rise approximately $200 million.
How Will This Benefit ET?
The additional capital investment provides upside potential for the project and an effective way to tap into expanding sources of demand.
Energy Transfer’s pipeline expansion strategy focuses on securing long-term shipping contracts before construction, which locks in predictable future cash flows and reduces risk. Because pipeline fees are based on contracted capacity and volumes transported, expanded capacity directly translates into higher, largely fee-based revenue.
ET is reinforcing its position as a dependable natural gas infrastructure provider in key markets by pausing the capital-intensive Lake Charles LNG export project and reallocating capital toward pipeline expansions with superior risk-adjusted returns.
Other Companies’ Focus on Pipeline Expansion
Pipeline expansions primarily help companies meet rising energy demand and, in turn, drive top-line growth. Along with ET, other oil and gas companies involved in pipeline expansion are mentioned below.
TC Energy Corporation (TRP - Free Report) has approved a $900 million natural gas pipeline project in Midwest U.S. The Northwoods pipeline expansion will add 400,000 million British thermal units of new capacity, equivalent to approximately 117,228 megawatt-hours (MWh), and increase the system’s storage capacity by 0.4 billion cubic feet per day. The project is expected to become operational by late 2029.
The Zacks Consensus Estimate for 2026 earnings per share (EPS) indicates year-over-year growth of 7.5%. TRP delivered an average earnings surprise of 2.5% in the last four quarters.
Kinder Morgan, Inc. (KMI - Free Report) is currently constructing the fully contracted $455 million Gulf Coast Express Expansion Project, which is designed to increase natural gas deliveries from the Permian Basin to South Texas markets by 570 million cubic feet per day (MMcf/d). The company’s share of the project investment is approximately $161 million, and the expansion is expected to be completed and placed into service by mid-2026.
The Zacks Consensus Estimate for 2026 EPS indicates year-over-year growth of 6.12%. The Zacks Consensus Estimate for 2026 sales implies a year-over-year improvement of 4.4%.
The Williams Companies, Inc. (WMB - Free Report) has commissioned two major expansions of its Transco natural gas pipeline system. The Texas–Louisiana Energy Pathway adds 364 MMcf/d of capacity to support Gulf Coast demand and LNG exports, while the Southeast Energy Connector adds 150 MMcf/d to help Alabama transition from coal to cleaner natural gas. These projects are part of Williams’ broader expansion efforts, which also include upgrades to other pipeline systems and future transmission capacity additions.
The Zacks Consensus Estimate for 2026 EPS indicates year-over-year growth of 10%. It delivered an average earnings surprise of 0.87% in the last four quarters.
Price Movement of ET
Over the past year, ET’s shares have lost 16.9%, more than the industry’s decline of 12.3%.
Image: Bigstock
Energy Transfer to Expand Transwestern Pipelines for Southwest Growth
Key Takeaways
Energy Transfer LP (ET - Free Report) announced plans to expand the Transwestern Pipeline as part of its Desert Southwest expansion project. The company will increase the pipeline diameter to 48 inches from 42 inches, boosting the project’s capacity to up to 2.3 billion cubic feet (Bcf) of natural gas per day.
With this project, the company will efficiently transfer natural gas from its premier asset base in the prolific Permian Basin.
The increase in pipeline diameter is primarily aimed at meeting rising energy demand in Arizona and New Mexico. Natural gas demand in these regions is growing due to population expansion, data center development, and increased utility requirements. In addition, the potential conversion of power plants from coal to natural gas could further boost regional gas demand.
The upsized project is expected to cost nearly $5.6 billion, excluding the allowance for funds used during construction. As a result, Energy Transfer’s total growth capital expenditures for 2026 are expected to rise approximately $200 million.
How Will This Benefit ET?
The additional capital investment provides upside potential for the project and an effective way to tap into expanding sources of demand.
Energy Transfer’s pipeline expansion strategy focuses on securing long-term shipping contracts before construction, which locks in predictable future cash flows and reduces risk. Because pipeline fees are based on contracted capacity and volumes transported, expanded capacity directly translates into higher, largely fee-based revenue.
ET is reinforcing its position as a dependable natural gas infrastructure provider in key markets by pausing the capital-intensive Lake Charles LNG export project and reallocating capital toward pipeline expansions with superior risk-adjusted returns.
Other Companies’ Focus on Pipeline Expansion
Pipeline expansions primarily help companies meet rising energy demand and, in turn, drive top-line growth. Along with ET, other oil and gas companies involved in pipeline expansion are mentioned below.
TC Energy Corporation (TRP - Free Report) has approved a $900 million natural gas pipeline project in Midwest U.S. The Northwoods pipeline expansion will add 400,000 million British thermal units of new capacity, equivalent to approximately 117,228 megawatt-hours (MWh), and increase the system’s storage capacity by 0.4 billion cubic feet per day. The project is expected to become operational by late 2029.
The Zacks Consensus Estimate for 2026 earnings per share (EPS) indicates year-over-year growth of 7.5%. TRP delivered an average earnings surprise of 2.5% in the last four quarters.
Kinder Morgan, Inc. (KMI - Free Report) is currently constructing the fully contracted $455 million Gulf Coast Express Expansion Project, which is designed to increase natural gas deliveries from the Permian Basin to South Texas markets by 570 million cubic feet per day (MMcf/d). The company’s share of the project investment is approximately $161 million, and the expansion is expected to be completed and placed into service by mid-2026.
The Zacks Consensus Estimate for 2026 EPS indicates year-over-year growth of 6.12%. The Zacks Consensus Estimate for 2026 sales implies a year-over-year improvement of 4.4%.
The Williams Companies, Inc. (WMB - Free Report) has commissioned two major expansions of its Transco natural gas pipeline system. The Texas–Louisiana Energy Pathway adds 364 MMcf/d of capacity to support Gulf Coast demand and LNG exports, while the Southeast Energy Connector adds 150 MMcf/d to help Alabama transition from coal to cleaner natural gas. These projects are part of Williams’ broader expansion efforts, which also include upgrades to other pipeline systems and future transmission capacity additions.
The Zacks Consensus Estimate for 2026 EPS indicates year-over-year growth of 10%. It delivered an average earnings surprise of 0.87% in the last four quarters.
Price Movement of ET
Over the past year, ET’s shares have lost 16.9%, more than the industry’s decline of 12.3%.
Zacks Rank
ET currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.