Energy Transfer has reached a positive financial investment decision (FID) on the Transwestern Pipeline expansion, aimed at enhancing natural gas supply to the burgeoning markets of Arizona and New Mexico from the prolific Permian Basin.

The expansion is set to cost around $5.3bn, inclusive of $600m for Allowance for Funds Used During Construction, and is backed by substantial long-term commitments from investment-grade customers.

The Transwestern Pipeline's Desert Southwest expansion will add 516 miles (830.4km) of 42in pipeline and nine compressor stations across Arizona, New Mexico and Texas. It will have a design capacity of 1.5 billion cubic feet per day.

This expansion is expected to provide reliable and economical natural gas supplies to meet the energy needs of a growing population, high-tech industries and data centre expansions in the region.

Energy Transfer will initiate an open season later this quarter, anticipating full subscription of the remaining capacity post open season.

The project's scale could be increased to meet additional demand, depending on the open season's outcome.

Due to be operational by the fourth quarter of 2029, the project continues Transwestern Pipeline's legacy of regional service since 1960.

It is also expected to support US industry, with plans to use US steel pipe manufacturers and up to 5,000 local and union labour construction jobs.

The pipeline network's extension will also improve system reliability and offer more options for the rapidly expanding demand in the south-western US.

Energy Transfer has also recently expanded its liquefied natural gas supply deal with Chevron to three million tonnes per annum (mtpa).

This enhancement comes after the signing of a 20-year incremental sale and purchase agreement for an extra 1mtpa from its Lake Charles LNG export facility, adding to the original 2mtpa agreement set to commence in December 2024.