ArcLight Capital Partners acquired a 25% equity stake in Gulf Coast Express Pipeline (GCX) from Phillips 66 for $865 million. Following the transaction, GCX will be jointly owned by energy infrastructure giant Kinder Morgan and ArcLight, with a Kinder Morgan subsidiary continuing to operate the pipeline.

The 500-mile GCX pipeline, which boasts a capacity of approximately 2 billion cubic feet per day, serves as a crucial link between the Permian Basin in the southwest U.S. and and key Gulf Coast markets, including the growing liquefied natural gas export facilities in South Texas. The pipeline’s operations are backed by long-term contracts with established shippers.

“As the U.S. seeks to meet the rapidly growing power demand needs associated with AI and data center infrastructure, we believe more natural gas related infrastructure, both power and midstream assets, will be needed to meet this objective,” said ArcLight Founder Dan Revers, adding that the deal expands firm’s strategic partnership with Kinder Morgan.

ArcLight Partner Lucius Taylor described GCX as a “critical-path, strategic natural gas infrastructure asset,” noting its position as one of the largest and most cost-effective transmission assets in the region. Taylor expressed confidence in GCX’s potential to capitalize on increasing Permian production and growing demand from LNG, power, and industrial sectors.

The acquisition adds to ArcLight’s extensive portfolio of energy infrastructure investments. Since 2001, the company has owned, controlled, or operated over 47,000 miles of electric and gas transmission infrastructure, establishing itself as one of the largest private owners in the sector.

The deal comes as global allocators place bets on ArcLight’s strategies, including a recent $500 million minority investment from the Abu Dhabi Investment Authority in its AlphaGen power portfolio and $25 million commitment from the Teacher Retirement System of Texas to an ArcLight co-investment fund focused on renewable infrastructure.

Advisors

Barclays Capital served as financial advisor on the transaction, with Latham & Watkins providing legal counsel to ArcLight.