ONEOK is to buy Brazos Midstream’s natural gas gathering and processing assets in the Permian Basin for $4.425 billion, in the latest move by a major US pipeline operator to consolidate infrastructure expected to serve artificial intelligence data centres and liquefied natural gas (LNG) exports.
The Tulsa-based company said the acquisition of Brazos’s Midland Basin operations would be financed partly through a $9 billion non-voting minority investment from funds managed by Apollo Global Management. ONEOK plans to use a further $5 billion of the proceeds to reduce its debt.
The transaction is expected to close in the fourth quarter of 2026, subject to customary conditions including regulatory approval. Apollo’s investment is expected to close in the first half of September.
Brazos’s assets include about 700 miles of gathering pipelines and 1.2 billion cubic feet per day (Bcf/d) of processing capacity once the Cassidy II plant is completed, which ONEOK expects to happen in the third quarter of 2027.
The system is supported by about 600,000 acres dedicated under long-term, fixed-fee contracts. ONEOK said the assets were backed by 14 active drilling rigs operated by producers including ExxonMobil, Diamondback Energy and Double Eagle.
The deal will more than double ONEOK’s processing capacity in the Midland Basin to about 2.3 Bcf/d, including plants already under construction. It will also link Brazos’s operations to ONEOK’s existing pipeline, natural gas liquids and crude oil infrastructure in West Texas.
London Spivey, an energy analyst at East Daley Analytics, said the acquisition reflected a broader effort by listed pipeline companies to buy private operators and build dominant positions in the most productive US basins.
“They’re picking the basins that they want to fight for, and they’re piecemeal acquiring as they’re trying to get dominant,” she told Fortune.
Natural gas demand rises
US natural gas production has more than doubled since the shale boom began in 2006, after remaining broadly flat for more than three decades. The country now produces about a quarter of the world’s natural gas and is the largest LNG exporter.
Production is expected to keep increasing as new export terminals are developed along the Texas and Louisiana Gulf Coast and electricity demand rises from data centres supporting artificial intelligence systems.
US Department of Energy projections cited by Fortune suggest output could increase by a further 35 per cent by 2050, reaching about 150 Bcf/d. That compares with roughly 50 Bcf/d two decades ago.
The Haynesville shale formation in Louisiana and East Texas, together with the Permian Basin in West Texas and New Mexico, is expected to provide much of the additional supply. The Permian produces large volumes of gas alongside its oil, and its gas output could rise even if oil production remains level as the basin matures.
ONEOK chief executive Pierce Norton said the company expected demand to be driven by both LNG exports and power generation for data centres, with Texas emerging as a particular focus for developers.
“There will eventually have to be more drilling in the United States than what’s going on right now, which will probably mean that [gas] price does creep up,” Mr Norton said. “The demand is going to be there, and it’s going to be driven by LNG exports and the AI data centres.”
The company and its partners are also developing the 450-mile Eiger Express pipeline, designed to carry up to 3.7 Bcf/d from the Permian to the Katy area near Houston. Construction is expected to begin in 2027, with the line scheduled to enter service in mid-2028, subject to approvals.
The project’s planned capacity was increased from 2.5 Bcf/d after pipeline customers signed additional transportation agreements, according to the project’s developers.
Several long-distance pipelines are being developed between West Texas and the Gulf Coast to address a shortage of takeaway capacity. At times, the bottleneck has pushed regional gas prices below zero, forcing some producers to pay to have unwanted supplies removed.
“The problem with the gas price in the Permian is going to get solved when all these pipes get built out,” Mr Norton said.
ONEOK has expanded rapidly in recent years. It bought Magellan Midstream for $18.8 billion, including debt, in 2023, followed by the acquisitions of EnLink Midstream and Medallion Midstream in 2024.
EnLink gave the company a substantial gas infrastructure presence across Texas, Louisiana and Oklahoma, while the Magellan and Medallion transactions were more heavily focused on crude oil and refined products.
Williams, another major US pipeline company, agreed in August to acquire Momentum Midstream in a deal worth up to $5.5 billion. Momentum’s Haynesville operations include more than 4,000 miles of pipeline, over one million dedicated acres and gathering capacity of about 6 Bcf/d.
Western Midstream separately agreed in May to pay $1.6 billion for Brazos’s Delaware Basin facilities, in the western section of the Permian. The series of transactions underlines how pipeline groups are positioning themselves between gas producers and the rapidly expanding markets for LNG and electricity.
