Energy Transfer sanctions $1.6bn South Mississippi pipeline

Energy Transfer has approved a $1.6bn final investment decision (FID, the point at which a project is formally sanctioned) for the South Mississippi Pipeline Project. The line will run 215 miles across southern Mississippi, US, with a 36in diameter and capacity of 1.2 billion cubic feet per day (bcf/d) of natural gas. Operations are scheduled to begin in 2030.

The company will operate the pipeline and hold a 51% ownership stake. Shippers will own the remaining interest, contingent on results of the current open season (a bidding process in which customers book capacity). The project is underpinned by long-term, demand-based transportation agreements. In plain words: the line has firm customer backing before steel is in the ground.

Energy Transfer announced the sanction alongside a second project. The company plans Bear II, a 200mcf/d cryogenic processing facility (a plant that separates natural gas liquids from gas by chilling it), next to its existing Bear plant in the Delaware Basin. Bear II is scheduled to start up in the third quarter of 2027.

What did the quarter deliver?

The disclosures came with Energy Transfer's third-quarter 2026 financial results. Net income attributable to partners for the quarter ended 30 September reached $1.21bn, up 18% from $1.02bn a year earlier. Revenue rose 86% to $37.1bn, against $19.95bn in the prior-year period.

Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA, a cash-flow proxy) came in at $5.03bn, a 31% increase from $3.84bn. The company raised full-year 2026 adjusted EBITDA guidance to $19.7bn-$19.9bn, up from the previous range of $18.8bn-$19.1bn.

Operational volumes set partnership records across several segments in the quarter:

• Intrastate transportation volumes: up 14%
• Midstream gathered volumes: up 6%
• Natural gas liquids (NGL) transportation: up 6%
• NGL exports: up 9%
• NGL fractionation volumes: up 5%, all versus Q3 2025

The takeaway: earnings growth is broad-based, driven by volume records rather than one-off gains.

Which projects advanced?

Several development initiatives progressed during the quarter. Phase I of the Hugh Brinson Pipeline entered full service ahead of schedule on 1 September 2026. Phase II is expected to complete in the first quarter of 2027, and the overall project is forecast to be delivered below budget.

In October, the company commissioned Mustang Draw II, a 275mcf/d processing plant in the Midland Basin. It also signed two agreements to provide firm natural gas transport via its MRT Pipeline to two power plants under construction in Missouri, with new pipeline and metering facilities to be installed in support of those contracts.

At Mont Belvieu, Energy Transfer will build its tenth fractionator (a unit that splits NGLs into component products), Frac X, with capacity of 200,000 barrels per day. Startup is expected in the first half of 2029. On the Rover Pipeline system, the company completed new compression and metering infrastructure to serve a 15-year transport agreement with a Marcellus-region producer.

The takeaway: sanctioned work is spread from the Permian to the Gulf Coast heartland, on schedule or better.

How does Vaquero fit in?

Last month, Energy Transfer agreed to acquire Vaquero Midstream for about $2.6bn in cash and equity. The deal aims to expand the company's natural gas gathering and processing network. Closing is expected in the fourth quarter of 2026, pending regulatory approvals.

The watch item: the open season outcome for South Mississippi shipper commitments, plus the Q4 2026 closing of the Vaquero transaction.