Energy Transfer LP announced that it will suspend the development of its Lake Charles LNG export facility in Louisiana and redirect the capital that had been earmarked for the project toward its pipeline backlog, with a particular focus on the Desert Southwest expansion.
The Lake Charles LNG project was intended to convert an existing import and regasification terminal into a liquefaction plant with a planned capacity of 16.45 million metric tons per year. The project had faced multiple delays, and its final investment decision was originally targeted for late 2025. Management concluded that the LNG project no longer offered a favorable risk‑return profile compared with pipeline projects, leading to the decision to halt construction and reallocate funds.
The Desert Southwest expansion will upgrade the Transwestern Pipeline from 42‑inch to 48‑inch diameter, increasing its capacity to 2.3 billion cubic feet per day. The estimated cost of the expansion is about $5.6 billion, and the project is expected to be in service by the fourth quarter of 2029. The expansion is driven by growing demand in Arizona and New Mexico and supports the transition of coal‑fired power plants to natural gas.
Energy Transfer’s Q3 2025 financial results provide context for the capital shift. Net income fell to $1.02 billion from $1.18 billion a year earlier, and revenue was $19.95 billion, below the $21.91 billion consensus estimate. Adjusted EBITDA declined slightly to $3.84 billion from $3.96 billion, reflecting higher operating costs and competitive pricing pressure in the midstream segment. The company’s earnings per share of $0.28 missed analyst expectations, largely due to the revenue shortfall and increased capital expenditures associated with pipeline projects.
Management stated that the LNG project was “not warranted” and that pipeline projects offer superior risk‑return characteristics. The decision underscores Energy Transfer’s continued emphasis on midstream infrastructure and a cautious approach to LNG amid market volatility. By reallocating capital to the Desert Southwest expansion, the company aims to strengthen cash‑flow stability and support long‑term growth in its core pipeline business.
The content on BeyondSPX is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.