With its “confidence level” higher than ever, Dominion Resources Inc. is rounding up its Appalachian-driven natural gas assets and forming a partnership that could generate up to $2 billion a year in earnings, CEO Tom Farrell said Thursday. As part of the overall restructuring, about 100,000 acres of the Marcellus Shale holdings in West Virginia will be farmed out.

Dominion Gas Holdings LLC, which would be the new master limited partnership (MLP), initially would include the Cove Point liquefied natural gas terminal (LNG) in Maryland and Dominion’s stake in Blue Racer Midstream LLC, a joint venture with a Williams unit that would carry Marcellus and Utica liquids to Gulf Coast and East Coast markets. Dominion Cove Point LNG LP on Wednesday received conditional approval to export LNG globally (see related story).

The MLP would own Dominion Transmission, East Ohio Gas and an interest in the Iroquois Pipeline (estimated at 24%).

“Over the next few weeks, we will reorganize the subsidiaries underneath it,” Farrell said at the Barclays CEO Energy-Power Conference. “It won’t be public because we have to go through the registration process with the Securities and Exchange Commission, but we will start that process and we will issue public debt,” and it should be a public company by the middle of 2014.

More Dominion natural gas pipelines may be added to the MLP, which could yield another $1 billion in earnings, Farrell told the audience. Nearly all of the MLP’s earnings power will be Appalachian-driven.

“The Utica gets a lot of headlines but Marcellus is the elephant in the room,” said Farrell. “Starting in 2008 there was almost no production out of the Marcellus. 2013, 10 Bcf/d, climbing to over 15 Bcf/d over the next 10 years.” With Utica “you’re going to get up to 20 Bs a day over the next 10 years.”

Meanwhile, pipeline takeaway capacity projects announced to date in the Marcellus is estimated for about 7.5 Bcf, he said. And Cove Point has existing gas import contracts through about 2025, which would supply one of the earnings streams, the CEO said.

Dominion sold its Appalachian acreage years ago but it retained ownership of the mineral rights below its gas storage facilities, which have about 1 Tcf of capacity, said Farrell. “This represents about 100,000 acres in West Virginia. This is our Fink Kennedy field, our [Wallace Creek] field and then we have two smaller fields. The big field’s about 80,000 acres.” That land is to be farmed out.

“The reason why we retained this gas is we wanted to make sure the drilling that was going to take place in this basin wasn’t going to damage the geology and compromise our storage fields. We are convinced at this point that that is the case.

“There’s 5,000 feet of separation between the Marcellus Shale…and where our gas storage facilities are, so we are actually…well into this process on marketing these acres. The structure will be an ongoing earnings stream coming from the acres that has little to do with how much gas is produced.”

As important for Dominion is the gathering, processing and transportation that would come from West Virginia, which should fuel “future Blue Racer-style joint ventures,” Farrell said.

The MLP is a direct result of the expected gas growth to come.

There’s “a lot of growth we believe, and we also don’t think we’ve been getting…the real value of our gas infrastructure business…So we thought it was important to find some vehicles to make it more transparent so people could really see the value and compare the assets and their earning streams to others in the sector.”