ArcLight Finalizes $865 Million Deal for Phillips 66’s Pipeline Stake
ArcLight Capital Partners has completed its $865 million acquisition of Phillips 66’s 25% stake in the Gulf Coast Express Pipeline further strengthening its midstream energy portfolio. The deal marks a key shift in the ownership of critical natural gas infrastructure, reinforcing ArcLight’s presence in the Permian Basin.
The 500-mile Gulf Coast Express Pipeline transports natural gas from the Permian Basin to the Texas Gulf Coast, playing a vital role in regional energy logistics. The transaction supports Phillips 66’s strategy of refining its asset portfolio while providing ArcLight with a stable, high-value midstream investment.
The role of the Gulf Coast Express Pipeline in US energy infrastructure
Commissioned in 2019, the Gulf Coast Express Pipeline was developed to ease bottlenecks in the Permian Basin, one of the nation’s most productive natural gas regions. With a capacity of approximately 2 billion cubic feet per day, the pipeline ensures efficient gas transport to key demand centers and export facilities along the Gulf Coast.
Owned in partnership with Kinder Morgan and other stakeholders, the pipeline has been instrumental in balancing supply and demand in the natural gas market. As US liquefied natural gas exports grow, assets like Gulf Coast Express remain essential for maintaining energy security and global market competitiveness.
Inside the $865 million ArcLight-Phillips 66 transaction
The $865 million deal reflects the increasing role of private equity in midstream infrastructure, particularly in high-growth markets like the Permian Basin. Phillips 66’s decision to divest its 25% stake aligns with its strategy to optimize assets and focus on higher-margin businesses.
Following the transaction, the pipeline’s ownership structure includes Kinder Morgan, DCP Midstream, ArcLight Capital, and an undisclosed partner. Kinder Morgan remains the pipeline’s operator.
The impact on the midstream sector and natural gas markets
This acquisition underscores a broader trend of private equity investment in midstream assets. As companies like Phillips 66 shift toward refining, petrochemicals, and renewable fuels, private capital is stepping in to manage critical infrastructure.
With the Gulf Coast Express Pipeline now part of ArcLight’s portfolio, the firm is expected to focus on optimizing operations and maintaining steady revenue from long-term transport agreements. Given the rising demand for natural gas infrastructure, ArcLight may pursue additional midstream acquisitions or expansions in the Permian Basin.
For Phillips 66, the divestment of $3 billion aligns with a broader strategy to streamline assets and allocate capital toward refining, petrochemicals, and renewable energy projects. The company is emphasizing lower-carbon initiatives, including renewable fuels and hydrogen production.
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