Energy Transfer Boosts Transportation Capacity for Desert Southwest Expansion Project

To meet additional customer demand in Arizona and New Mexico, Energy Transfer will increase the transportation capacity of Transwestern Pipeline’s upcoming Desert Southwest Expansion project. The project’s primary pipeline diameter will be upsized from 42 inches to 48 inches, boosting its capacity to approximately 2.3 billion cubic feet per day; however, this volume will depend on the final compression configuration.

“Natural gas generation is an important part of SRP’s all-of-the-above approach to ensuring reliability and affordability for our customers,” said Bobby Olsen, SRP Associate General Manager and Chief Power System Executive. “The Transwestern Desert Southwest Pipeline expansion will help enable us to meet the region’s growing power needs and strengthen Arizona’s energy infrastructure.”

The requirement for additional capacity was identified following a recent open season, in which persistent population growth and positive economic momentum in Arizona and New Mexico mandated efficient, reliable energy sources. Energy Transfer’s eventual project execution will help serve these markets throughout the Permian Basin and across its asset base. The company expects the project to enter operation in Q4 2029.

Aligning with demand growth in the Desert Southwest region, companies are looking to retire and/or convert coal-fired power plants to natural gas usage – an updated transportation capacity may benefit these conversion projects. The final capacity of the Desert Southwest Expansion project, expected to cost approximately $5.6 billion, will be based on market demand.

Open Bidding Season

In late September 2025, the Transwestern Pipeline Co. (Transwestern), launched a binding open season for a planned pipeline expansion in the Desert Southwest. The expansion will take place in Texas, New Mexico, and Arizona, transporting natural gas supplies from the Permian Basin to markets in the United States’ southwestern region. Transwestern’s open bidding season ended on October 25, 2025.

The Desert Southwest expansion project combines new large-diameter pipeline, compression, and metering facilities to transport a minimum of 1.5 bcf/day of natural gas from numerous receiving points in the Permian Basin. From these offtake points, natural gas will be delivered to new and existing locations in New Mexico and Arizona. Project benefits include supply reliability, as southwestern markets will have increased access to Permian natural gas supplies.

Rates and services are designed specifically for local distribution companies, power generators, and data centers, ensuring delivery flexibility. Transwestern will execute modifications to its existing Phoenix Lateral, installing bi-directional capabilities. The company already secured sufficient binding commitments for the project, with additional commitments submitted for the recently announced open season.

Combining Assets with Sunoco

Energy Transfer and Sunoco entered a joint venture on July 1, 2024, to combine respective crude oil and produced water-gathering assets in the Permian Basin. Energy Transfer will operate the joint venture and add its Permian crude oil and water gathering assets and operations, while Sunoco will contribute its crude oil gathering assets.

Energy Transfer’s long-haul crude pipeline network—excluded from the joint venture—transports crude oil from the Permian Basin to Nederland, Houston, and Cushing. The joint venture will operate more than 5,000 miles of crude oil and water gathering pipelines with a crude oil storage capacity over 11 million barrels. Sunoco will hold a 32.5% interest and Energy Transfer will hold a 67.5% interest in the joint venture.