Energy Transfer LP will proceed with a $5.3 billion expansion of its Transwestern system to move natural gas from the Permian Basin into New Mexico and Arizona. Service is targeted for late 2029 to relieve persistent takeaway constraints that have affected Permian producers and pressured Waha pricing during periods of oversupply.
The Desert Southwest expansion will add about 516 miles of 42-inch pipeline, nine compressor stations across Texas, New Mexico, and Arizona, and a design capacity of ~1.5 Bcf/d. The project is supported by long-term commitments from investment-grade shippers, with an open season scheduled this quarter for remaining capacity.
Anchor shippers and local demand. Arizona Public Service (APS) is the anchor customer and, together with Salt River Project (SRP), has committed to firm capacity to fuel gas-fired plants that will support large new loads, primarily data centers. Tucson Electric Power (TEP) and UniSource Energy Services as well as the City of Mesa are finalizing agreements. Utilities note that all existing interstate pipelines serving Arizona are fully subscribed, which underscores the need for new firm capacity.
Transwestern currently operates about 2,590 miles of pipeline capable of moving roughly 0.9 Bcf/d from southwest Texas to Arizona. APS, SRP, and TEP already take deliveries on this network, and the expansion is designed to add a new westbound outlet for Permian volumes.
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Commercial and design options
Depending on shipper interest from the open season, certain segments may use 46-inch pipe, which management indicates could allow a material capacity increase, potentially more than doubling the base design. APS projects approximately $7.3 billion of gas purchases over 25 years tied to the project and plans to bring new gas plants online as the line enters service. The APS contract includes flexibility to call for additional volumes as needed.
Added westbound capacity provides another evacuation route for associated gas, reduces curtailment risk during maintenance or congestion on existing corridors, and aligns with Arizona’s rising electricity demand from data centers and select manufacturing.
Processing plants placed in service
Energy Transfer reported that the 200 MMcf/d Lenorah II processing plant in the Midland Basin entered service in the second quarter and is running at full rates. The 200 MMcf/d Badger plant was also placed in service in the Delaware Basin through a relocation project. These additions support higher inlet volumes tied to Permian growth.
NGL export flexibility ramping at Nederland
The Flexport expansion at the Nederland terminal entered ethane and propane service earlier in 2025. Ethylene export service is expected to begin in the fourth quarter of 2025. The project is designed to add up to about 250,000 barrels per day of total NGL export capacity, improving outlets for liquids associated with Permian production.
Operating throughput highlights
Compared with the prior year’s quarter, Energy Transfer reported broad operational growth: interstate natural gas transportation up about 11 percent, midstream gathered volumes up about 10 percent, crude oil transportation up about 9 percent, intrastate natural gas transportation up about 8 percent, NGL transportation up about 4 percent, NGL fractionation up about 5 percent, and NGL and refined products terminal volumes up about 3 percent. NGL exports set a new quarterly record, up about 5 percent.
Want more context on Energy Transfer? Read these from our blog:
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2023: Energy Transfer widened its Permian footprint with the Lotus Midstream deal, strengthening crude gathering that supports broader system planning for projects like today’s westbound gas build. Read here.
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2023: The Crestwood takeover added scale in gathering and processing, helping pull more volumes to market and improving contracting options for future expansions. Learn more.
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2022: Before Arizona came into focus, Energy Transfer was racing Permian gas toward Gulf Coast hubs. See how that corridor compares with today’s westbound plan.
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2021: Mariner East showed how the company executes large NGL projects despite challenges, a useful backdrop as new capacity plans move forward. See how that played out.
