Natural Gas Pipelines Expand as LNG & AI Demand Grows
Several midstream energy companies are expanding their natural gas pipelines through new acquisitions and project developments as they look to capture growing demand for natural gas driven by liquefied natural gas (LNG) exports and data centers.
Key Takeaways
Strategic Acquisitions and M&A Activity
This year has seen midstream operators deploy capital to consolidate high-demand pipeline corridors. Leading the charge, Williams Companies (WMB) is set to acquire Momentum Midstream for $5.5 billion. The acquisition adds 4.05 billion cubic feet per day (Bcf/d) of capacity across three take-or-pay pipelines. The pipelines are positioned to serve growing Gulf Coast LNG, power, and industrial customers.
Alongside the acquisition, Williams announced its $1.5 billion Delta Access Expansion. This 2.25 Bcf/d take-or-pay project along its Transco corridor will move Haynesville natural gas to growing Gulf Coast markets starting in early 2029.
Long-Term Take-or-Pay Agreements Secure Cash Flows
Decades-long contractual commitments are common in the midstream space, helping offset risk. A joint venture, including Enbridge Inc. (ENB:TSE) and MPLX LP (MPLX), officially sanctioned the Bay Runner Twin Pipeline. The project is designed to deliver 2.6 Bcf/d of Permian gas supply to NextDecade’s (NEXT) Rio Grande LNG facility. Furthermore, the take-or-pay pipeline is scheduled to enter service by 2030.
This project will add to the original 2.6 Bcf/d Bay Runner Pipeline, which is slated to begin service in the third quarter of this year.
Data Centers and Power Needs Drive Regional Expansions
Hyperscale AI data centers are rapidly emerging as key consumers of natural gas power generation. TC Energy Corporation (TRP:TSE) sanctioned two expansion efforts backed by 20-year take-or-pay contracts. These include the $300 million Central Virginia Capacity Project (0.4 Bcf/d targeting 2028–2030) and the $100 million Clark Project (0.3 Bcf/d targeting 2028). Both serve natural gas-fired utilities catering to regional data centers.
Similarly, DT Midstream Inc. (DTM) commercialized a new 380 million cubic feet per day (MMcf/d) interconnect on its NEXUS pipeline. The pipeline addition directly supplies a newly constructed AI data center in Ohio.
For investors looking to capture the energy infrastructure aspect of growing natural gas demand, the Alerian Energy Infrastructure ETF (ENFR) offers direct exposure to these key midstream names.
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