President Donald Trump's pro-energy policies were meant to speed the construction of the United States' next generation of energy infrastructure, but many oil and gas pipeline operators would still rather buy than build their way to expansion due to a host of factors impeding large projects.
Trump declared an energy emergency on his first day in office and has issued directives to support exports, reform permitting and roll back environmental standards. Since his November election, a number of large-scale projects have been greenlit, including a liquefied natural gas terminal and a handful of pipelines.
But higher costs from a global trade war sparked by U.S. tariffs, labor shortages, low oil prices, and the risk of legal snags mean many companies are generally reluctant to commit to bold new construction.
Instead, operators see mergers and acquisitions as a more efficient way to grow. In the first quarter of this year, 15 U.S. midstream deals were struck, the highest quarterly number since the final three months of 2021, according to energy tech company Enverus.
"We have spent a lot of time thinking about the buy versus build question and, at this time, we're seeing more opportunities to buy assets," said Angelo Acconcia, a partner at ArcLight Capital Partners, which invests in energy infrastructure.
Acconcia said factors including tariffs and high demand for supplies and labor made it challenging to calculate the economics of building a project.
One of the most prevalent trends in dealmaking so far in 2025 has been pipeline companies buying back stakes in joint ventures, previously sold to help fund the initial development costs of prior-year builds.
Targa Resources (TRGP.N) said in February it would acquire preferred equity in its Targa Badlands pipeline system from Blackstone (BX.N) for $1.8 billion, while MPLX (MPLX.N) said in the same month it would buy the 55% interest in the BANGL natural gas pipeline previously owned by WhiteWater Midstream and Diamondback Energy (FANG.O) for $715 million.
Private equity owners of energy infrastructure are keen sellers, having spent recent years developing systems that are now online.
Northwind Midstream, a New Mexico-focused pipeline operator, is currently being marketed for sale by Five Point Infrastructure, for example.
TARIFFS WEIGH
In recent years, U.S. oil and gas pipeline projects have faced regulatory hurdles and robust environmental opposition, resulting in years of delay and substantial cost overruns.
The Mountain Valley Pipeline, a natural gas conduit owned by an EQT Corp-led group (EQT.N), started operating last June but took six years to build and cost more than double its initial $3.5 billion budget.
While the industry has welcomed Trump's pro-fossil fuel sentiment, some of his other policies - including tariffs on products like steel - are pushing up the cost of new energy projects.
Weak global crude prices have also prompted warnings from U.S. oil and gas producers that they could curtail output growth, making pipeline firms cautious about new spending.
Some companies, including Kinder Morgan (KMI.N), said they believe there are better economics in smaller-scale projects that expand existing infrastructure than in big new ones.
Others are wary of even those types of projects.
"I think we just need to let the clock run here a little bit, see how the basin responds," he told analysts on a call.
OPTING TO BUILD
Despite the hurdles, the math still favors new construction for some companies.
"Generally, on buy versus build, if you have the opportunity to build, you build because the returns are largely better," said Ali Akbar, managing director of energy investment banking at Greenhill, a Mizuho affiliate.
He said buying an asset like a pipeline can sometimes cost two times more than building something similar.
"It's nice to see some people that actually think their job is to help get infrastructure built as opposed to being obstructive," outgoing CEO Alan Armstrong said on an earnings call this month.
