Energy Transfer Expands $5.6B Desert Southwest Pipeline to Meet Surging Data Center and Power Demand
December 24, 2025
In a significant move to address the escalating energy needs of the booming data center industry and regional power generation, Energy Transfer LP has announced a major capacity upgrade for its planned Desert Southwest pipeline expansion. The decision underscores the critical role of reliable, high-capacity natural gas infrastructure in supporting the digital economy and the ongoing transition of the power grid.
The company confirmed it will increase the mainline pipeline diameter from 42 inches to 48 inches (106 to 121 cm) for the Transwestern Pipeline's Desert Southwest expansion project. This engineering change, prompted by stronger-than-expected customer commitment during a recent open season, will boost the project's potential capacity to up to 2.3 billion cubic feet per day (65.1 million cubic meters per day). The pipeline, which received its final investment decision in August 2025, will stretch approximately 516 miles (830 km) from Winkler County, Texas, to Coolidge, Arizona, powered by nine new compressor stations.
The expansion is strategically designed to serve growing demand in the Desert Southwest, a region experiencing rapid data center development. Furthermore, the project is positioned to benefit from the potential retirement or conversion of coal-fired power plants to natural gas in the area. A key feature of the expansion is the conversion of the existing Phoenix Lateral into a bi-directional line, enhanced by new compressor stations in Maricopa and Pinal Counties, Arizona. This upgrade will provide crucial operational flexibility to move natural gas in either direction based on real-time market needs.
With the upsizing, the total projected cost of the infrastructure project has risen to approximately $5.6 billion. Consequently, Energy Transfer anticipates its total growth capital expenditures for 2026 will increase by about $200 million. The company targets having the expanded pipeline system in service by the fourth quarter of 2029.
The scale of this investment highlights the deepening interdependence between energy networks and digital infrastructure. For data center operators, securing long-term, high-volume power contracts often depends on the availability of fuel sources like natural gas for electricity generation. This pipeline expansion, therefore, not only supports immediate demand but also facilitates future economic and industrial growth across Arizona and New Mexico by providing a foundational energy backbone.
Source: gascompressionmagazine
