Targa Resources Corp. announced Monday it plans to acquire rival pipeline operator Stakeholder Midstream for $1.25 billion, marking the latest transaction in a series of pipeline deals across the southern United States.

The acquisition strengthens the Houston-based pipeline company’s presence in the Permian Basin, enhancing its capacity to transport and store oil and natural gas. This expansion is timed to meet rising demand, driven in part by the booming need for natural gas to power energy-intensive artificial intelligence and data centres.

Data compiled by Bloomberg suggests up to a dozen new pipeline projects are expected to be completed next year across Texas, Louisiana, and Oklahoma, boosting the region's gas transport capacity by approximately 13%.

The surge in pipeline construction is fuelled by increased natural gas demand, the rapid development of liquefied natural gas (LNG) terminals along the Gulf of Mexico, and the current administration’s efforts to solidify the U.S.’s status as the world’s leading gas exporter.

According to a company statement, the purchase deal will see Targa gain approximately 480 miles of gas pipelines, along with gas and sour crude processing and treatment capacity, including carbon capture technology. The assets are supported by long-term contracts covering about 170,000 acres in the Permian Basin.

Targa CEO Matt Meloy expressed confidence in the move, stating that the company is “very familiar with the acquired assets and have strong relationships with some of the largest producers on the system.”

Targa plans to finance the transaction using cash and a $3.5 billion line of credit, with the deal slated to close early next year. The company projects the Stakeholder assets will generate roughly $200 million annually, after accounting for anticipated operating costs.