Energy Transfer Equity LP took a major step in consolidating its partnership assets with a $38 billion acquisition of Williams Cos., fitting CEO Kelcy Warren’s long-standing formula for building an energy empire: Buy companies that connect the dots in the industry to leapfrog competitors.

The combination will create the third largest energy franchise in North America, following ExxonMobil and Chevron in the pecking order, and one of the five largest global energy companies. The combination will also benefit customers by enabling further investments in capital projects and efficiencies that would not be achievable absent the transaction.

The combined company would be the largest transporter of natural gas in the U.S., moving more than 15 percent of U.S. crude and on track for approval to build the country’s second-largest gas export terminal at a time when domestic production remains near record levels.

“The merger builds economies of scale in an industry where size matters,” Erik Gordon, a clinical assistant professor at the University of Michigan’s Ross School of Business, said in an e-mail. “All that natural gas has to move to markets, and pipelines will get more valuable.”

Alan Armstrong, President and Chief Executive Officer of Williams, said, “Williams’ intense focus on connecting the best natural gas supplies to the best natural gas markets will be a significant complement to the ETE family of diverse energy infrastructure. As a combined company, we will have enhanced prospects for growth, be better able to connect our customers to more diverse markets, and have more stability in an environment of low commodity prices. Importantly, Williams Partners will retain its current name and remain a publicly traded partnership headquartered in Tulsa, Oklahoma.”