DTE joins rush to natural gas, shelling out $1.3B for midstream assets

Dive Brief:

DTE Energy has signed agreements to purchase three midstream natural gas assets for an aggregate sum of $1.3 billion.
DTE plans to buy all of Appalachia Gathering System in Pennsylvania and West Virginia, 40% of Stonewall Gas Gathering in West Virginia from M3 Midstream, and 15% of SGG from Vega Energy Partners.
The assets will become part of the DTE's non-utility gas storage and pipeline business and will provide the company with access to multiple markets, including the Great Lakes region, through interconnections with Columbia Gas Transmission, Texas Eastern Transmission and the NEXUS Gas Transmission project being developed by DTE and Spectra Energy.

Dive Insight:

Low priced natural gas produced by hydraulic fracturing has made natural gas the dominant fuel for power generation in much of the United States. Nowhwere is that more true than in the MidAtlantic and Midwest regions, where there is ready access to the Marcellus and Utica shale plays of Pennsylvania and West Virginia.

DTE’s announcement of plans to buy a bundle of midstream gas assets marks yet another instance of a power company seeking to way to participate in the boom.

In the last 12 months, Duke Energy unveiled plans to buy distributor Piedmont Natural Gas, Dominion announced it would buy Questar, ConEd dropped $975 million on a gas pipeline venture, and Southern Co. finalized its merger with AGL Resources

DTE said it sees the acquisition as a way to participate on what it says will be increasing demand as coal-to-gas switching continues to grow, particularly in the Great Lakes area where low-cost gas from the Marcellus and Utica plays will displace higher cost alternatives.

“The acquired assets are in a productive area of the Southwest Marcellus/Utica region and have expansion potential,” Gerry Anderson, CEO of DTE Energy, said in a statement.