Midstream Scales Up Natural Gas Infrastructure

As noted last week, midstream MLPs and corporations broadly raised full-year financial guidance following a strong second quarter. Looking ahead, the sector’s growth runway is accelerating. Additional Permian natural gas takeaway capacity is prompting a wave of new gas processing and natural gas liquids (NGL) infrastructure as production grows. Meanwhile, surging liquefied natural gas (LNG) exports and power generation demand are driving record backlogs across the space.

Key Takeaways

The arrival of critical natural gas pipeline capacity is alleviating longstanding constraints in the Permian. Over 15 billion cubic feet per day (Bcf/d) of new takeaway capacity is expected by 2030.
To accommodate rising producer volumes and a gassier Permian production mix, midstream operators are sanctioning new gas processing plants and gathering systems.
Surging electricity needs for data centers and advancing U.S. LNG export facilities continue to expand project backlogs. These now collectively exceed $160 billion for six names with significant natural gas infrastructure.

Easing Permian Bottlenecks Unlock Further Capacity

The Permian Basin is the nation’s largest oil-producing area and its second-largest natural gas-producing region. While long known for its oil output, the basin’s production mix is continuing to get gassier. Today, each barrel of Permian crude comes with 1.3 barrels equivalent of natural gas and NGLs (up from 1.0 in 2022). This is forcing midstream operators to aggressively expand processing and takeaway capacity to keep pace with rising volumes. The surge in associated natural gas production (i.e., natural gas produced from an oil well) has resulted in pipeline bottlenecks in the basin at times, with the latest constraint now alleviating.

Source: Enterprise Products Partners (EPD) Investor Deck, 8/10/26

New Pipelines Easing Permian Constraints

Critical infrastructure relief began to arrive in the middle of this year. The June start-up of Kinder Morgan’s (KMI) 570 million cubic feet per day (MMcf/d) Gulf Coast Express Expansion served as the basin’s first incremental relief valve. This also coincides with the West Texas (Waha) natural gas price benchmark switching into positive territory after months of negative trading. For context, the Permian basin produced 28.7 billion cubic feet per day (Bcf/d) of natural gas in 2025.

Additional takeaway capacity is imminent. Recent updates include Energy Transfer’s (ET) 1.5 Bcf/d Hugh Brinson natural gas pipeline entering commercial service earlier than expected and 2.5 Bcf/d joint venture Blackcomb pipeline commissioning in July. The added natural gas capacity from these two projects creates a positive runway for continued production growth from the basin into 2027 and beyond. Meanwhile, more projects are already under construction to enter service over the next few years.

Most recently, a consortium led by WhiteWater Midstream sanctioned the Solitude Pipeline System, which will route from the Permian to Katy, Texas. The system will consist of two 2.25-Bcf/d pipelines, with the first slated for late 2029 and the second coming on in 2030. The natural gas pipelines shown above will add approximately 15.2 Bcf/d of collective takeaway capacity out of the Permian by 2030. This infrastructure wave provides critical egress, enabling continued basin production growth even as associated natural gas volumes rise.

Permian Processing Accelerates to Meet Volume Growth

With natural gas takeaway constraints in the Permian easing, midstream operators are sanctioning new processing plants, fractionators (processing facilities for NGLs), and gathering expansions to accommodate rising producer volumes. As a result, capital spending guidance was raised or tightened by several operators, including EPD, ET, MPLX (MPLX), Plains All American (PAA), and Kinetik (KNTK).

Mixed NGLs are produced alongside crude oil and raw natural gas. Before these liquids can reach end markets, they must be separated from natural gas, transported via pipeline, and fractionated into individual products like ethane, propane, and butane. These products have applications in heating, fuel blending and as feedstocks for plastics. NGLs require dedicated midstream infrastructure across the entire value chain and often command premium fees due to their complexity.

NGL Growth Projects

To capture the expected volume growth in Permian NGLs, midstream operators sanctioned a number of major organic growth projects:

Targa Resources (TRGP) announced new 20-year fee-based agreements with ExxonMobil (XOM) and sanctioned three new natural gas processing plants in the Delaware Basin with an aggregate capacity of ~825 MMcf/d, expected in service in 1H28.
EPD announced a new 300-MMcf/d gas processing plant in the Delaware Basin, a 300-MMcf/d plant in the Midland Basin, and a new 150 thousand barrel per day (MBpd) NGL fractionator at Mont Belvieu.
ONEOK (OKE) upsized the planned Bighorn processing plant in the Delaware Basin to 400 MMcf/d, citing strong producer activity, and reached the 80% contracting target for its 200-MBpd share of the planned joint venture liquefied petroleum gas (LPG, a subset of NGLs) export terminal.
KNTK announced the gas processing plant Kings Landing II, expanding system processing capacity by 300 MMcf/d, and authorized procurement of long-lead equipment for the next processing expansion.
PAA announced the build-out of Permian gathering systems to service an additional 120,000 dedicated acres, bringing its total dedicated Permian acreage to ~5.1 million acres.

In Canada, midstream operators are also expanding infrastructure to support NGL logistics and regional petrochemical demand. Keyera (KEY CN) recently sanctioned the Alberta Corridor Export (ACE) rail terminal project, a facility designed to load unit trains and significantly boost exports of Canadian LPG.

Similarly, Pembina Pipeline (PPL CN) recently sanctioned the $570 million Heartland Extraction Plant (HEP), a new NGL extraction facility. The announcement was accompanied by an amended long-term agreement to supply Dow (DOW)‘s expanding petrochemical operations, increasing Pembina’s total contracted ethane volumes to Dow by 15% to just over 57 MBpd.

Natural Gas Tailwinds Continue to Support Robust Backlogs

Long-term natural gas demand drivers, anchored by new LNG export infrastructure and rising power needs, continue to expand midstream project backlogs across North America. Collectively, disclosed project backlogs for six midstream companies with significant natural gas infrastructure now exceed $160 billion. This provides multi-year visibility for fee-based EBITDA growth.

Most notably on the LNG side, Enbridge (ENB CN) and MPLX sanctioned the joint venture 2.6 Bcf/d Bay Runner Twin Pipeline, which will supply natural gas to NEXT’s Rio Grande LNG facility under long-term take-or-pay agreements.

Power Generation Projects

Natural gas demand for power generation facilities is supporting a number of new projects announced alongside second-quarter earnings updates:

TC Energy (TRP CN) sanctioned the $300 million Central Virginia Capacity project (Columbia Gas) and $100 million Clark project (Columbia Gulf) to serve natural gas-fired power generation and data center demand.
DT Midstream (DTM))sanctioned three new organic growth projects, including a 200-MMcf/d Haynesville system expansion (LEAP Phase 5) and commercialized a new 380 MMcf/d interconnect on NEXUS to supply natural gas power generation for an Ohio data center.
Williams (WMB) announced two new expansion projects tied to the recently acquired Momentum Midstream footprint, upsized Transco’s Power Express to 800 MMcf/d, and announced a 7-mile extension of its Woodside LNG-anchored Line 200 pipeline to serve Louisiana power demand.
OKE secured a natural gas supply agreement for 1 gigawatt (GW) of power plant demand and noted late-stage commercial discussions to supply AI data centers.
Antero Midstream (AM) is evaluating a backlog of 15 additional projects in West Virginia, primarily related to power generation and data centers, representing “several billion dollars” of potential opportunities.

The multi-billion-dollar backlogs for natural gas infrastructure names, spanning both projects under construction and future projects, support a multi-year runway for highly visible, fee-based EBITDA growth. As a result, many midstream names focused on these opportunity sets have been able to raise their long-term guidance.

Bottom Line

Natural gas and NGL infrastructure momentum shows no signs of slowing as operators execute on massive, multi-billion-dollar backlogs tied to rising Permian volumes, expanding LNG exports, and increased power demand. Backed by a strong outlook and durable fee-based cash flow growth, midstream operators are well-equipped to fund these stepped-up expansion programs while maintaining solid financial flexibility.

For the latest insights on how energy infrastructure can provide reliable yield and defensiveness amid market uncertainty, watch the replay of our recent 30-minute webcast, “Navigating Macro Volatility with Energy Infrastructure.”

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