Texas pipeline giant Energy Transfer will expand network after $3.25 billion acquisition

Dallas energy giant Energy Transfer plans to expand its massive natural gas network with a $3.25 billion purchase.

The company has agreed to acquire WTG Midstream, a privately held, Midland-based organization that specializes in gas processing and gathering. The transaction will add more than 6,000 miles of gas receiving pipelines to Energy Transfer’s more than 200,000 miles of energy infrastructure and expand the company’s natural gas pipelines and processing network in the Permian Basin.

Texas is largely powered by natural gas — in 2020, almost half of the energy produced in the region of the Electric Reliability Council of Texas, which manages most of the state’s grid, will come from natural gas-fired power plants. Energy Transfer is one of the state’s leading natural gas carriers and has been growing rapidly in recent years.

Last year alone, the company’s acquisitions included Houston-based Crestwood Energy Partners and Sugar Land-based Lotus Midstream. These purchases added to Energy Transfer’s assets in the Williston, Delaware and Permian oil and gas basins. The Lotus acquisition also increased Energy Transfer’s storage capacity in Midland by 2 million barrels.

“We continue to invest in assets, including natural gas, that add value to our overall midstream business and to our unitholders,” the spokesperson wrote in an email response to a question about why the company continues to invest in natural gas.

Energy Transfer’s first-quarter results, released May 8, show that “with the addition of new development projects and acquisitions,” interstate natural gas transportation volumes increased by 5%.

The same results show that Energy Transfer also approved eight natural gas-fired power generation facilities to support its operations in Texas. These facilities are expected to be operational in 2025 and 2026.

Texas’ dependence on natural gas has caused problems in the past. After the February 2021 winter storm, ERCOT officials said the main cause of the outages appeared to be the state’s natural gas suppliers, which were not designed to withstand low temperatures during production.

The transaction between Energy Transfer and WTG Midstream is expected to close in the third quarter of this year, subject to regulatory approval and customary closing conditions, according to Tuesday’s press release.

Representatives from WTG Midstream and ERCOT did not respond to requests for comment.