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EQT Drops Transmission, Gathering Systems to Midstream MLP For $275M

EQT Corp. has dropped down the Allegheny Valley Connector (AVC) and several Marcellus Shale gathering systems to its midstream master limited partnership (MLP), EQT Midstream Partners LP (EQM), for $275 million in cash.

The AVC is regulated by the Federal Energy Regulatory Commission and spans 209 miles. It also includes 11 Bcf of working gas storage and has 450 MMcf/d of transmission capacity. The system is fully contracted for the winter heating season by utility Peoples Natural Gas through a firm reservation commitment that doesn't expire until 2034.

EQM said it expects to invest $50 million in "AVC-related growth projects during the remainder of 2016 and 2017."

EQT also sold the Applegate, McIntosh and Terra gathering systems in Pennsylvania and the Taurus system in West Virginia. Those include 87 miles of pipeline, 7,000 hp of compression and provide 370 MMcf/d of gathering capacity in both states. EQT has already committed to 235 MMcf/d of firm capacity on the systems with EQM under a 10-year contract.

EQM said it would invest $105 million over the next few years to complete planned expansion projects on those systems, including the installation of 20 miles of new pipeline and four compressor units totaling 20,000 hp. EQT said it would increase its firm capacity on those systems to 365 MMcf/d once the projects are complete.

The deal was effective Oct. 1. EQT said a small gathering system was not included in the sale because it is being evaluated for sale to a third party. The company didn't offer specifics on that system or which company might purchase it.

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