Midstream consolidation continues as US Energy Transfer makes $3.25 billion deal

HOUSTON (ICIS)–Energy Transfer plans to acquire WTG Midstream for $3.25 billion, the latest deal in an ongoing consolidation of the industry that provides feedstocks to chemical plants.

Energy Transfer is acquiring WTG from affiliates of Stonepeak, the Davis Estate and Diamondback Energy, it said on Tuesday. The deal should close in Q3 2024.

The deal includes eight natural gas processing plants that have a total capacity of 1.3 billion cubic feet/day. Two additional plants are under construction that will add another 400 million cubic feet/day of capacity, with the first starting up in Q3 2024 and the second in Q3 2025.

Natural gas processing plants extract ethane and other natural gas liquids (NGLs) from raw gas produced from oil and gas wells. The NGLs are then shipped to fractionators which extract the individual products.

Ethane and other NGLs are the main feedstock that US crackers use to make ethylene.

The deal also includes a 20% stake in the Belvieu Alternative Natural Gas Liquid (BANGL) pipeline.

The BANGL will stretch for 425 miles (683 km) and will have an initial capacity of 125,000 barrels/day, expandable to more than 300,000 barrels/day. It will connect the Permian basin to the fractionation hub in Sweeny, Texas, on the Gulf Coast. The pipeline could be completed in H1 2025.

Other partners in the pipeline include MPLX and Rattler Midstream, a company formed by Diamondback Energy.

SURGE IN MIDSTREAM M&A
Energy Transfer’s acquisition is the latest in a surge of deals in the midstream industry. The following lists some of the more recent mergers and acquisitions (M&A).

• Phillips 66 agreed to buy Pinnacle Midland Parent from Energy Spectrum Capital for $550 million
• ONEOK is buying NGL pipelines from Easton Energy for $280 million
• EQT is acquiring Equitrans Midstream in a deal that the Wall Street Journal valued at $5.5 billion
• Energy Transfer completed its $7.1 billion merger with Crestwood Equity Partners in November 2023
• ONEOK completed its $18.8 billion acquisition of Magellan Midstream Partners in September 2023
• Phillips 66 completed a deal for additional units of DCP Midstream, raising its stake to 86.8%

The deals come amid a flurry of new projects being built by midstream companies, which includes processing plants, pipelines, fractionators and terminals. When completed, the infrastructure will provide feedstock to petrochemical plants in the US and the world.

Thumbnail shows pipeline. Image by Global Warming Images/REX Shutterstock