Half-Life 2: Episode 3 doesn't exist because Left 4 Dead does

“Left 4 Dead needed an all-hands-on effort to ship, and so we put down [Episode 3] to go help Left 4 Dead,” explained developer David Speyre.

The developers also revealed that Episode 3 didn’t make it after the team switched focus to concentrate on getting Left 4 Dead “out the door”.

The team did, however, reflect that if Episode 3 had been realised, we may not have seen other sequels like Portal 2 or Left 4 Dead 2.