There’s a pipeline of deals—for pipelines—that will help power the AI boom

Good morning loyal Term Sheet readers, this is energy editor, Jordan Blum, filling in for Allie. The Middle East remains in a state of chaotic conflict, and fuel and oil prices are still sky high.

All these geopolitical variables put a partial freeze on energy dealmaking—potential sellers ask for more money on inflated valuations, while the buyers think longer term and conservatively. It’s hard to meet in the middle on a price tag.

The main exception though is in the so-called midstream sector, essentially the pipelines and gathering and processing systems that move the oil and gas from the wellheads to the refineries, power plants, or liquefied natural gas (LNG) export hubs.

“Midstream has been pretty busy,” said Andrew Dittmar, principal analyst at ​Enverus Intelligence Research. “There’s just such a demand for infrastructure right now, particularly on the [natural] gas side, as we sort of reshape the U.S. gas market with LNG demand coming online on the Gulf Coast and data center demand increasing.”

That upswing in pipeline plays received a potential boost Wednesday with the Senate introduction of a bipartisan, infrastructure permitting reform bill that could gain legislative momentum before the end of the year. Such a law would benefit all-of-the-above energy to benefit the AI boom. That would mean expediting oil and gas pipelines and projects, but also the wind, solar, and electric transmission projects that have faced opposition within the Trump administration.

And that could further speed up dealmaking. Recently, Tulsa-based ONEOK bought West Texas’s Brazos Midstream’s Permian Basin assets for $4.42 billion. This comes shortly after pipeline giant Williams acquired Momentum Midstream and its Texas and Louisiana pipeline gathering and processing facilities for $5.5 billion. And Western Midstream paid $1.6 billion for Brazos’s Delaware Basin facilities in the western lobe of the Permian.

These deals essentially all involve private equity firms selling high to public companies looking to build scale. “I think the market does favor larger, integrated midstream systems, and we’re going to continue to see some of the smaller players, particularly on the private side, rolled up amid a considerable acquisition appetite from the large companies,” Dittmar said. On the oil side, pipeline giant Enbridge just bought Tallgrass Energy’s crude assets for $2.55 billion, and Plains All American Pipeline paid $585 million for Silver Creek Midstream in Wyoming.

As for the oil and gas production side of the business—the upstream sector—there hasn’t been a massive deal since early February when Devon Energy paid $26.5 billion for Coterra Energy. That notably came weeks before the onset of the Iran war.

The biggest upstream deal since is Magnolia Oil & Gas paying $4 billion for Warburg Pincus’ and Kayne Anderson WildFire Energy in South Texas’ Eagle Ford Shale. None of those companies are exactly household names.

Now, Devon is trying to sell its own Eagle Ford assets to help cut down on the debt it assumed from the Coterra deal. BP was closely eyeing those assets but reportedly backed off. Dittmar said it’s notable BP is even looking to expand in U.S. shale.

“If you have a global major looking at U.S. onshore assets, it continues to speak to how competitive and attractive the opportunities are here, even as we talk about inventory scarcity,” he said.

Major U.S. companies are looking to explore internationally again—as the U.S. shale business matures—while more international players are willing to pay a premium for U.S. assets to ensure long-term supplies, especially for LNG. “It’s interesting that we talk about international capital coming to the U.S. at the same time that U.S. capital is looking to go abroad,” Dittmar added.

Jordan Blum
jordan.blum@fortune.com
@jdblum23

Submit a deal for the Term Sheet newsletter here.

Joey Abrams curated the deals section of today’s newsletter. Subscribe here.

This story was originally featured on Fortune.com