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DTE Expanding Bluestone on Southwestern's Growing Marcellus Volumes

DTE Energy Co. plans to expand its in-field natural gas gathering system in Susquehanna County, PA, by 50% under an agreement with Southwestern Energy Co.

Southwestern's transportation capacity on the Bluestone Pipeline also would increase, the Detroit-based operator said.

"Our expectation was to continue to enhance our relationship with Southwestern and this agreement further reinforces that intention while firming up the five-year outlook in our gathering business," said DTE Executive Vice President Dick Redmond, who handles gathering and processing. "We are confident in the Southwestern Energy resource. The performance in the core Susquehanna area has been strong and improving."

Houston-based Southwestern has big plans in Appalachia after agreeing in October to pay $5.38 billion to Chesapeake Energy Corp. for 413,000 net acres and 1,500 wells in in southern Pennsylvania and northern West Virginia (see Shale DailyOct. 16). Marcellus gas production increased in 3Q2014 by 47% to 66 Bcf from a year earlier (see Shale DailyOct. 24). Eighteen wells ramped up in the three-month period, with gross operated output of 840 MMcf/d.

The two-year-old Bluestone system, DTE's first outside of Michigan, is 44.5 miles long and now delivers up to 0.8 Bcf/d combined to Millennium Pipeline in Broome County, NY and Tennessee Gas Pipeline in Susquehanna County (see Shale DailyDec. 6, 2012). Plans are to increase capacity to 1.0 Bcf/d by mid-2016 (see Shale DailyMay 16).

Southwestern COO Bill Way said during the conference call in October that by the end of this year Southwestern expected to have firm transportation contracted from Pennsylvania for more than 1 Bcf/d, and it would increase to almost 1.2 Bcf/d in 2016. The producer had 234 operated wells on production in Pennsylvania at the end of September, with 102 wells in progress. All but one of the operated wells were horizontals, and of the 102 wells in progress, 36 were either waiting on completion or waiting to tie into pipe.

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