U.S. pipeline giants buy up rivals as gas demand soars

The wave of acquisitions among U.S. pipeline giants reflects a strategic response to a projected surge in natural gas production. The U.S. already produces about a quarter of the world's natural gas and leads in LNG exports, but demand from AI data centers and new export facilities could push output up another 35% by 2050. Companies like ONEOK are buying smaller private players to gain the infrastructure needed to move gas from prolific basins like the Permian to Gulf Coast export terminals and data centers.

ONEOK's shopping spree, which included the $18.8 billion acquisition of Magellan Midstream in 2023 and the purchase of EnLink and Medallion in 2024, shows a deliberate strategy to build scale. CEO Pierce Norton notes that the company was too small a few years ago to fulfill this ambition. The new Brazos deal adds 700 miles of gathering lines and processing capacity, and a planned long-haul pipeline to Houston is already seeing high demand, with capacity expanded to over 3.5 Bcf/d.

The consolidation trend is also a response to past bottlenecks, where negative regional spot prices forced some producers to pay to have excess gas taken away. As Norton says, these pipeline buildouts are expected to solve that problem. The focus on Texas and Louisiana is no coincidence—those states combine ample gas supplies with industry-friendly regulations, making them attractive for both LNG exports and data center development.