Energy Transfer to expand Transwestern Pipeline with $5.3 billion project

DALLAS - Energy Transfer LP (NYSE:ET), a prominent player in the Oil, Gas & Consumable Fuels industry with a market capitalization of $60.85 billion, announced Tuesday it has reached a positive financial investment decision for the expansion of its Transwestern Pipeline to increase natural gas supply to Arizona and New Mexico markets from the Permian Basin. According to InvestingPro analysis, the company is currently trading below its Fair Value, suggesting potential upside for investors.

The Desert Southwest pipeline expansion project will consist of 516 miles of 42-inch pipeline and nine compressor stations across Arizona, New Mexico and Texas. The pipeline is designed with a capacity of 1.5 billion cubic feet per day and is expected to be in-service by the fourth quarter of 2029. With strong financials including $82.06 billion in revenue over the last twelve months and a healthy dividend yield of 7.45%, Energy Transfer continues to demonstrate its commitment to shareholder value.

The project, estimated to cost approximately $5.3 billion including $0.6 billion in Allowance for Funds Used During Construction, is supported by significant long-term commitments from investment-grade customers. Energy Transfer plans to launch an open season later this quarter and expects the remaining capacity to be fully subscribed. For detailed analysis of Energy Transfer’s investment potential and 10+ additional ProTips, visit InvestingPro, where you’ll find comprehensive research reports and expert insights.

According to the company’s press release statement, the expansion aims to provide reliable natural gas supplies to support long-term energy needs in the region driven by population growth, high-tech industry demand and data center expansion. The company’s strong financial health score and consistent dividend payments for 20 consecutive years underscore its ability to execute long-term projects while maintaining shareholder returns.

The project is expected to utilize up to 5,000 local workers and union labor construction jobs during the construction period, with a focus on U.S. steel pipe manufacturers.

Energy Transfer operates approximately 140,000 miles of pipeline and associated energy infrastructure across 44 states. The Transwestern Pipeline has been serving the southwestern region since 1960.

The company noted that depending on the final results of the open season, the project could be expanded to accommodate additional demand.

In other recent news, Energy Transfer LP has announced a significant $5.3 billion expansion of its Transwestern Pipeline to enhance natural gas supply to Arizona and New Mexico from the Permian Basin. This project, expected to be operational by the fourth quarter of 2029, will include 516 miles of pipeline and nine compressor stations. In addition, Energy Transfer reported that the Bureau of Industry and Security has rescinded a previous license requirement for certain ethane exports to China, allowing for more streamlined transactions. Meanwhile, Energy Transfer and Enbridge Inc. are planning to upgrade pipeline capacity in Illinois to increase crude oil transport to the U.S. Gulf Coast, with the project named the Southern Illinois Connector. Energy Transfer also received a Buy rating from TD Cowen, highlighting its diversified operations and strategic advantages. In related developments, Sunoco LP declared a 1.25% increase in its quarterly distribution, aligning with its business outlook and capital allocation strategy. These developments highlight ongoing expansion and strategic initiatives within the energy sector.

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