click for larger version
In 2016, DTE Energy, a BIG utility and midstream company based in Detroit, MI, purchased 100% of M3 Midstream’s Appalachia Gathering System (AGS), located in Pennsylvania and West Virginia, and 40% of M3’s Stonewall Gas Gathering (SGG), located in West Virginia (see DTE Energy Buys Marcellus/Utica Pipelines for $1.3B). The reason? To feed natgas-fired electric plants the utility wants to build (see DTE’s Reason for Buying M-U Pipes: NatGas-Fired Electric Plants). DTE has just cut a deal to buy another 30% of the Stonewall system in WV.
DTE Midstream will pay $275.3 million for another 30% of Stonewall. The transaction is due to close in either late second or early third quarter of this year. DTE has been the operator of SGG for nearly three years now, since buying 40% of SGG in 2016. Including the 40% purchase in 2016, DTE owned 55% of SGG prior to this deal. Now they will own 85% of SGG.
DTE Midstream, a non-utility business unit of DTE Energy Co., has reached a deal to acquire an additional 30 percent of Stonewall Gas Gathering in West Virginia for $275.3 million.
The deal with Washington, D.C.-based wholesale energy solutions business WGL Midstream Inc. adds to DTE Midstream’s 55 percent ownership interest in SGG, bringing DTE Midstream’s ownership interest to 85 percent. The assets will become part of DTE Midstream, formerly known as Gas Storage and Pipelines.
Stonewall Gas Gathering is an approximately 67-mile, 36-inch natural gas gathering system. DTE Midstream has been operating SGG for nearly three years, according to a Thursday news release.
“The area has great geology and provides a strategic connection to other assets,” DTE Energy spokeswoman Jill Wilmot said in an email.
The transaction will either close late in the second quarter or during the third quarter, and it won’t have a material impact on 2019 earnings, Wilmot said.
“Expanding our ownership in SGG has strong strategic rationale. SGG complements our existing midstream business and provides a platform for continued value creation supported by a solid underlying resource,” DTE Midstream President David Slater said in the release.
DTE Midstream posted operating earnings of $233 million in 2018, and the original guidance was $185 million-$195 million, Wilmot said. (1)
What (and where) is SGG? It’s hard to find any good information. DTE itself lumps SGG together with AGS on its website, and gives the following aggregated stats for what they call their Link System:
The Link Lateral and Gathering system consists of the Appalachia Gathering System (AGS) and Stonewall Gas Gathering (SGG). This system includes a high-pressure header system which connects to two interstate pipelines, Texas Eastern Pipeline to the north and Columbia Pipeline to the south, as well as various in-field gathering systems, supporting many of the largest producers in the SW Marcellus and the dry Utica. AGS is wholly owned and operated by DTE while SGG is majority owned and operated by DTE. Link is operated out of our Morgantown, WV office.
- 175 mile gathering pipeline system; 145 miles high-pressure header system (16”, 20”, 24” and 36” diameters) and 30 miles of field gathering (6”, 8”, 10”, 12” diameter)
- Transports up to 2.2 billion cubic feet/day with the capability of future expansions
- Compression facilities with more than 20,000 HP installed
- Engineering design and pipeline construction services with advanced SCADA system automation
- Excellent operating reliability, safety and compliance record; zero OSHA recordable incidents since asset was acquired in October 2016 (2)
SGG wasn’t built by DTE, it was built by Vega Energy, M3 Midstream and WGL. We found this description of the system by Vega, current until they sold their interests in it in 2016:
In June 2014, Vega joined with developer M3 Midstream, WGL, and Marcellus Shale producer Antero Resources to commence the Stonewall Gas Gathering System to develop and own an approximately 67-mile, 36-inch natural gas gathering system. The gathering system can transport up to 1.4 billion cubic feet per day (up to 2.0 Bcf/d with additional compression) of natural gas from various production points in West Virginia to the Columbia Gas Pipeline. The pipeline commenced service on schedule and on budget on 30 November 2015. (3)
(1) Crain’s Detroit Business (May 2, 2019) – DTE Midstream to acquire additional 30% stake in West Virginia natural gas system
(2) DTE Midstream (undated, accessed May 3, 2019) – AGS & SGG – The Link System
(3) Vega Energy (undated, accessed May 3, 2019) – Stonewall Gas Gathering System
This post appeared first on Marcellus Drilling News