(Reuters) — MPLX LP said on July 31 it will acquire Northwind Midstream for $2.38 billion in cash to expand its sour gas gathering and processing footprint in the Permian Basin, as producers ramp up drilling in New Mexico.

Northwind, backed by Five Point Infrastructure, operates in Lea County, New Mexico, with a network spanning more than 200 miles of pipeline and covering over 200,000 dedicated acres.

The company currently treats 150 million cubic feet per day (MMcfpd) of sour gas and has two acid gas injection (AGI) wells in service, with a third permitted.

AGI safely disposes of hydrogen sulfide and carbon dioxide, common sour gas byproducts, by injecting them deep underground to prevent harmful emissions.

An ongoing expansion is expected to increase Northwind's treating capacity to 440 MMcfpd by the second half of 2026.

Demand for sour gas treatment in the Delaware Basin has exceeded available infrastructure, as limited AGI permitting and capacity have slowed the pace of some producer activity.

MPLX said the deal would allow it to offer faster solutions to both existing and new customers in the region.

"The addition of 200,000 dedicated acres will increase MPLX's access to natural gas and NGL volumes," MPLX CEO Maryann Mannen said in a statement.

Dealmaking in the midstream sector has been picking up pace as some companies look to cut costs or add scale and gain access to attractive oil- and gas-producing regions as well as export facilities on the U.S. Gulf Coast.

The deal, financed with debt and expected to close in the third quarter, is expected to be immediately accretive to MPLX's distributable cash flow.