The ONEOK Brazos Midstream deal, worth $4.42 billion, will more than double the Tulsa, Oklahoma-based pipeline giant’s Midland Basin processing capacity to approximately 2.3 Bcf/d, including plants under construction, according to ONEOK Investor Relations.
The acquisition picks up 700 miles of gathering lines and 1.2 Bcf/d of gas processing capacity from Brazos Midstream’s Permian Basin assets.
To fund the purchase, Apollo Global Management is taking a minority stake in ONEOK through a $9 billion investment: $4 billion directed at the Brazos acquisition and $5 billion applied to debt reduction.
ONEOK Brazos Midstream deal: what the acreage covers
The transaction is underpinned by about 600,000 dedicated acres, with roughly 4,000 remaining well locations and 14 active drilling rigs, according to the Oil & Gas Journal.
Producers operating under long-term, fixed-fee contracts on that acreage include ExxonMobil Corp., Diamondback Energy Inc., and Double Eagle.
London Spivey, energy analyst at East Daley Analytics, said ONEOK is getting good value to grow its footprint in the Permian’s more mature Midland Basin. ‘They’re getting the gas to help feed that AI demand to profit along every step of the value chain,’ Spivey told Fortune.
‘They pull it out of the ground, they bring it to their plant, they process it, they’re able to put it on one of their pipelines and transport it to that end demand, whether it’s data centers or feeding LNG,’ he added.
Pipeline consolidation and the race to scale
The Brazos deal is the latest in a run of acquisitions reshaping the US midstream sector. Pipeline giant Williams recently bought Momentum Midstream and its Texas and Louisiana gathering and processing facilities for $5.5 billion. In May, Western Midstream paid $1.6 billion for Brazos’ Delaware Basin assets.
ONEOK has itself been on an extended buying run. In 2023 it acquired Magellan Midstream for $18.8 billion including debt. In 2024, it bought both EnLink Midstream and Medallion Midstream. The Magellan and Medallion deals centred on crude oil and refined products; EnLink brought gas infrastructure in Texas, Louisiana, and Oklahoma.
Spivey described the broader pattern plainly. ‘It highlights the trend that we’ve been seeing across the entire industry of these big publics going in and buying out all these privates and consolidating,’ he said.
ONEOK chief executive Pierce Norton said the Brazos acquisition fits a long-running strategy. ‘This is a decisive step in the strategy that we have executed for years, building scale in the most attractive producing regions and connecting that supply to ONEOK’s integrated system,’ Norton said on a conference call.
Norton said he is in constant talks with data centre developers and flagged a clear geographic pull. ‘There seems to really be a focus on Texas right now,’ he said.
Separate from the Brazos deal, ONEOK and partners are building the 450-mile Eiger Express Pipeline to carry gas from the Permian to the Houston area, due online in 2028. Customer demand was strong enough that planned capacity was raised from 2.5 Bcf/d to more than 3.5 Bcf/d.
Norton pointed to a regional pricing problem that new pipeline capacity should resolve. ‘The problem with the gas price in the Permian is going to get solved when all these pipes get built out,’ he said. At times, excess supply has pushed regional spot prices negative, with some producers paying to have gas removed.
US natural gas output is projected by the Department of Energy to rise a further 35% to 150 billion cubic feet per day by 2050, up from roughly 50 Bcf/d two decades ago. The US currently produces about a quarter of the world’s natural gas and leads in liquefied natural gas exports.
Norton framed ONEOK’s ambition in a single line: ‘Our little motto is that we want to touch as many molecules as we can for as long as we can.’
