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WGL Midstream Takes Ownership in New Appalachian Gas Gathering System

WGL Midstream has made an $89 million equity investment in M3 Midstream LLC's Stonewall natural gas gathering system, giving it a 35% ownership interest in the pipeline.

Stonewall has a capacity of up to 1.4 Bcf/d. It entered service in November 2015 and is currently delivering 1 Bcf/d of Marcellus Shale gas from West Virginia to mid-Atlantic markets.

WGL said it secured an option to invest in the Stonewall system as part of an existing supply agreement with Appalachian pure-play producer Antero Resources Corp. Antero is the anchor shipper on the system, and it has a firm sales agreement to deliver 330,000 Dth/d to mid-Atlantic markets and WGL customers. WGL Midstream is a subsidiary of WGL Holdings Inc., the parent of utility Washington DC Gas Light.

One of those customers is Gail Global LNG LLC, a subsidiary of India’s state-owned integrated gas company, Gail Ltd. In 2014, WGL entered an agreement with Gail to sell up to 430,000 Dth/d of natural gas for a term of 20 years starting on the in-service date of the Cove Point liquefied natural gas (LNG) export facility in Maryland. WGL said it expects to provide that gas through its agreement with Antero.

The Stonewall system is an expansion of M3's Appalachian Gathering System, which extends from Southwest Pennsylvania to northern West Virginia. Stonewall was constructed to gather additional gas from Doddridge, Harrison and Lewis counties, WV. It connects with Columbia Gas Transmission (TCO).

Antero said last month that it anticipates positive natural gas basis differentials throughout 2016, due in part to the Stonewall pipeline (see Shale Daily, Feb. 19). The system, Antero said, allowed it to shift volumes from Dominion South and Texas Eastern Transmission Co. M2 to more favorable TCO and Gulf Coast markets.

M3 is Stonewall’s majority owner and operator. Vega Energy Partners also has a stake in the system. WGL said that its ownership would drop to 30% if other participants join the system as expected.

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