While the Trump administration has fast-tracked permits and rolled back environmental rules to boost U.S. energy infrastructure, pipeline companies are opting for acquisitions over new construction, deterred by soaring costs, legal risks, and uncertain demand.
Why Buy Instead of Build?
💰 Cost Challenges:
- Steel tariffs inflated material prices.
- Labor shortages delay projects and inflate budgets (e.g., Mountain Valley Pipeline cost 2x initial estimate).
⚖️ Regulatory & Legal Risks: Environmental lawsuits can tie up projects for years.
🛢️ Weak Oil Prices: Producers warn of output cuts, reducing urgency for new pipelines.
M&A Boom in Midstream
📊 Deal Surge: 15 midstream transactions in Q1 2025—highest since 2021 (Enverus).
🔁 JV Buybacks: Firms like Targa Resources and MPLX are repurchasing stakes in existing pipelines.
🏷️ Private Equity Exits: Investors like Blackstone cash out on completed projects.
Exceptions: Who’s Still Building?
🚧 Energy Transfer: Moving forward with $2.7B Texas gas pipeline.
🏗️ Tallgrass Energy: Constructing Permian-to-Rockies gas line.
💡 Niche Projects: Williams Cos. bets on data center gas demand in Ohio.
Industry Split
🛑 Cautious Players: Kinder Morgan and DT Midstream favor small expansions over greenfield projects.
🏆 Optimistic Builders: Firms like Energy Transfer argue returns are better for new builds.
Trump’s Mixed Impact
✅ Pro-Energy Policies: Faster permits, LNG export support.
❌ Tariff Backfire: Steel levies raise construction costs by 15–20%.
What’s Next?
- More M&A: Private equity will keep selling mature assets.
- Selective Builds: Only pipelines with locked-in demand (e.g., gas for AI data centers) may proceed.
- Election Wildcard: A second Trump term could ease tariffs—or double down on trade wars.