DT Midstream's Strategic Acquisition of ONEOK's Pipelines: Unlocking Value Amid FERC Regulatory Challenges

In late 2024, DT Midstream completed a transformative $1.2 billion acquisition of three FERC-regulated natural gas pipelines from ONEOK, marking a pivotal step in its strategy to consolidate midstream energy infrastructure. The Guardian, Midwestern Gas Transmission, and Viking Gas Transmission pipelines-spanning 1,300 miles and offering 3.7 Bcf/d capacity-connect critical supply basins like the Utica and Marcellus Shales and Canadian resources in Emerson, Manitoba, according to a ONEOK press release. This move not only bolsters DT's asset base but also positions it to capture long-term demand from industrial and utility customers. However, the acquisition's success hinges on balancing value creation with regulatory headwinds, particularly under FERC's evolving oversight.

Value Creation: Strategic Expansion and EBITDA Growth

The acquisition aligns with DT Midstream's focus on high-quality, demand-pull assets. By integrating these pipelines, the company expects its pipeline segment to account for approximately 70% of Adjusted EBITDA in 2025, according to a DT Midstream investor announcement. This shift underscores the financial rationale: stable cash flows from regulated infrastructure often provide a buffer against market volatility.

ONEOK's prior acquisitions, such as EnLink and Medallion, have already demonstrated the potential for EBITDA synergies. For instance, ONEOK reported $250 million in synergy-related adjusted EBITDA in 2025, according to a Globe and Mail earnings report, a trend DT Midstream could replicate by optimizing the newly acquired assets. Additionally, projects like the Guardian Pipeline's G3+ expansion-approved for a 40% capacity increase-highlight DT's ability to leverage long-term contracts with investment-grade utilities to drive growth, according to a DT Midstream earnings transcript. These expansions, combined with the acquired pipelines' strategic connectivity, position DT to capitalize on regional supply-demand imbalances.

FERC Rate Risk Dynamics: Navigating Regulatory Uncertainty

While the acquisition's financial benefits are clear, FERC-related risks loom large. The Louisiana Carbon Capture and Storage (CCS) project, a separate DT initiative, exemplifies the regulatory challenges. As of Q3 2025, permitting delays caused by reorganizations within Louisiana's regulatory agencies have stalled final investment decisions, according to a DT Midstream earnings transcript. Though the ONEOK pipelines themselves are not directly impacted by these delays, the broader regulatory environment underscores the vulnerability of midstream projects to policy shifts.

FERC's Order 2222, aimed at integrating distributed energy resources into wholesale markets, also introduces indirect risks. While its impact on NYISO markets is minimal, the order's implementation by late 2026 could reshape rate structures for transmission operators nationwide, according to a Platts analysis. For DT Midstream, this means potential adjustments to revenue models, particularly if rate cases for the acquired pipelines face scrutiny. However, the company's focus on long-term, fixed-fee contracts may mitigate some of these risks by insulating cash flows from short-term regulatory fluctuations.

Balancing the Equation: A Prudent Outlook

DT Midstream's acquisition of ONEOK's pipelines represents a calculated bet on midstream resilience. The 70% EBITDA contribution from the pipeline segment in 2025, according to a DT Midstream investor announcement, signals a strategic pivot toward regulated infrastructure, which historically offers predictable returns. Yet, the Louisiana CCS delays and FERC's evolving regulatory landscape necessitate caution. Investors should monitor DT's ability to navigate these challenges while leveraging the acquired assets' operational strengths.

For now, the acquisition appears to align with DT's long-term vision. As the company executes expansions like the Guardian G3+ project and integrates the ONEOK pipelines, its success will hinge on maintaining regulatory agility and capitalizing on the Midwest's natural gas demand.