(August 8, 2025) – Energy Transfer LP has approved a $5.3 billion Desert Southwest expansion of its Transwestern Pipeline, designed to increase natural gas deliveries from the Permian Basin to Arizona and New Mexico’s rapidly growing markets.
The project will add 516 miles of 42-inch pipeline and nine compressor stations across the three states, boosting system capacity to 1.5 billion cubic feet of natural gas per day (Bcf/d). According to Energy Transfer, the expansion will provide reliable, long-term energy supplies for utilities and energy providers, meeting demand driven by population growth, high-tech industry needs, and data center development.
Arizona utilities sign on for capacity
Arizona Public Service (APS) and Salt River Project (SRP) will require additional fuel to power their planned buildouts of natural gas-fired power plants as the state faces significant data center and overall population growth. Both utilities are among those subscribing to capacity from the Desert Southwest expansion.
APS and SRP have each reviewed multiple proposals and independently executed agreements with Energy Transfer. The City of Mesa, Tucson Electric Power (TEP), and UniSource Energy Services are finalizing negotiations with Transwestern. TEP and UniSource are expected to move forward with agreements before the project’s open season solicitation later this year.
Timeline and potential for expansion
Service is expected to begin in the fourth quarter of 2029. The project builds on Transwestern’s long-standing presence in the Southwest, with operations dating back to 1960. Depending on the results of the open season, Energy Transfer has indicated the system could be expanded further to meet additional demand.
The investment includes $600 million in Allowance for Funds Used During Construction (AFUDC). Construction will use U.S.-produced steel and is projected to employ up to 5,000 workers, including union labor.
Headquartered in Dallas, Texas, Energy Transfer LP is one of the nation’s largest midstream energy companies, operating more than 125,000 miles of pipeline across 41 states. Founded in 1996, the company specializes in the transportation, storage, and distribution of natural gas, crude oil, natural gas liquids, and refined products. Its extensive network connects major U.S. production basins to processing plants, storage hubs, and end markets, including nearly 200 natural gas-fired power plants.
Energy Transfer’s assets include the Transwestern Pipeline, which serves Texas, New Mexico, Arizona, and California, as well as other major infrastructure such as the Dakota Access Pipeline and Gulf Coast NGL systems. The company operates primarily on long-term, fee-based contracts, providing stable cash flows while supporting industrial, residential, and power generation needs across the country.
With the Desert Southwest expansion, Energy Transfer is building on its decades-long footprint in the region to meet the energy demands of one of the fastest-growing parts of the country.