Energy Transfer to Build $5.3 Billion Texas-to-Arizona Natural Gas Pipeline

Energy Transfer LP is moving forward with plans to build a $5.3 billion natural gas pipeline from the Permian Basin to markets in New Mexico and Arizona.

The expansion of the company’s Transwestern Pipeline networks that’s slated to begin operations in late 2029 will provide an outlet for Permian gas producers that have struggled with a dearth of shipping capacity.

The project, which Energy Transfer said already has lined up shipping commitments from unidentified companies, may be a death knell for a Kinder Morgan Inc. proposal to build a conduit along a similar route.

Kinder Morgan fell as much as 4.6%, making it the worst performer of the day in the S&P 500 Energy Index. Energy Transfer rose 1.8% to $18.06 at 10:01 a.m. in New York.

The boom in Permian Basin shale drilling that unleashed vast outflows of crude oil has also resulted in gluts of so-called associated gas so severe that local prices for the fuel have on occasion turned negative.

Energy Transfer’s project will involve more than 500 miles (800 kilometers) of 42-inch pipe with a capacity of 1.5 billion cubic feet per day, the company said in a statement Wednesday. It also will include nine compressor stations in Arizona, New Mexico and Texas.