Pipelines Are Hot: $11.5 Billion in Midstream Deals Fuel the AI Boom

Tulsa-based ONEOK paid $4.42 billion for Brazos Midstream's Permian Basin assets, extending a wave of midstream consolidation that has bucked a broader slowdown in energy dealmaking. The deal landed shortly after pipeline giant Williams acquired Momentum Midstream and its Texas and Louisiana gathering and processing facilities for $5.5 billion. Western Midstream paid another $1.6 billion for Brazos's Delaware Basin facilities in the western lobe of the Permian.

The pipeline sector stands out in an otherwise frozen market. Middle East conflict and sky-high fuel and oil prices have put a partial freeze on energy dealmaking: potential sellers ask for more money on inflated valuations, while buyers think longer term and conservatively. The two sides struggle to meet in the middle on a price tag.

Midstream is the exception. The sector covers the pipelines, gathering and processing systems that move oil and gas from wellheads to refineries, power plants, or liquefied natural gas (LNG) export hubs.

"Midstream has been pretty busy," said Andrew Dittmar, principal analyst at Enverus Intelligence Research. "There's just such a demand for infrastructure right now, particularly on the [natural] gas side, as we sort of reshape the U.S. gas market with LNG demand coming online on the Gulf Coast and data center demand increasing."

A legislative wildcard

The upswing received a potential boost Wednesday with the Senate introduction of a bipartisan infrastructure permitting reform bill that could gain legislative momentum before the end of the year. Such a law would benefit all-of-the-above energy to serve the AI boom — expediting oil and gas pipelines and projects, but also the wind, solar, and electric transmission projects that have faced opposition within the Trump administration.

Faster permitting could accelerate dealmaking in a sector already moving quickly. The recent transactions share a pattern: private equity firms selling high to public companies looking to build scale.

"I think the market does favor larger, integrated midstream systems, and we're going to continue to see some of the smaller players, particularly on the private side, rolled up amid a considerable acquisition appetite from the large companies," Dittmar said.

The oil side is consolidating too. Enbridge just bought Tallgrass Energy's crude assets for $2.55 billion. Plains All American Pipeline paid $585 million for Silver Creek Midstream in Wyoming.

Upstream stalls — with one notable exception

The production side of the business — the upstream sector — tells a different story. There hasn't been a massive deal since early February, when Devon Energy paid $26.5 billion for Coterra Energy. That deal came weeks before the onset of the Iran war.

The biggest upstream transaction since is Magnolia Oil & Gas paying $4 billion for Warburg Pincus' and Kayne Anderson's WildFire Energy in South Texas' Eagle Ford Shale. None of those companies are exactly household names.

Now Devon is trying to sell its own Eagle Ford assets to cut down on the debt it assumed from the Coterra deal. BP was closely eyeing those assets but reportedly backed off. Dittmar said it's notable BP is even looking to expand in U.S. shale.

"If you have a global major looking at U.S. onshore assets, it continues to speak to how competitive and attractive the opportunities are here, even as we talk about inventory scarcity," he said.

Capital flowing both directions

The cross-border currents cut both ways. Major U.S. companies are looking to explore internationally again as the U.S. shale business matures, while more international players are willing to pay a premium for U.S. assets to secure long-term supplies, especially for LNG.

"It's interesting that we talk about international capital coming to the U.S. at the same time that U.S. capital is looking to go abroad," Dittmar added.

If the Senate permitting bill advances before year-end, the pipeline sector — already the busiest corner of energy M&A — could see its deal pipeline widen further.