DT Midstream Inc. (DTM) has inked a deal to acquire an additional 26.25% stake in the Millennium Pipeline Co. LLC., a natural gas system, for about $552 million.
The 263-mile conduit, which entered service in 2008, delivers natural gas from the Marcellus and Utica shales to utility and power plant markets across New York and New England.
DTM is a founding developer and existing co-owner of the system with a roughly 26% stake.
“Increasing our ownership in a premium integrated asset like Millennium Pipeline directly aligns with our strategic investment thesis and accelerates our growth plan,” said DTM CEO David Slater. “This transaction also increases the revenue contribution from our pipeline segment, underpinned by take-or-pay contracts with high credit quality customers.”
The transaction, slated to close by year’s end, “will be immediately value accretive and, given the strength of our balance sheet, will be fully funded with cash on hand and available credit capacity,” added CFO Jeff Jewell.
Detroit-based DTM is focused on “owning pure-play natural gas assets connecting premier supply basins with key demand centers and market regions, and with revenues supported by long-term take-or-pay contracts with creditworthy and diverse customers,” management said.
DTM’s assets include interstate and intrastate pipelines, as well as storage and gathering assets, with gas sourced primarily from the Appalachian Basin and Haynesville Shale.
In a presentation earlier in September, DTM management saidd in Appalachia, “Emerging takeaway capacity constraints favor pipelines in the ground with expansion capability,” such as the firm’s Nexus Gas Transmission Pipeline LLC.
In the Haynesville, meanwhile, Slater in August unveiled DTM’s plans to expand the capacity of its Louisiana Energy Access Project (LEAP) by 70% to 1.7 Bcf/d, citing growing demand from “attractive domestic and LNG export markets on the Gulf Coast.” The system could be further expanded to about 3 Bcf/d with additional looping and compression, according to the firm.
LEAP currently moves about 1 Bcf/d of Haynesville supply to the Gulf Coast for industrial use and liquefied natural gas exports.
In total, DTM assets currently provide about 2 Bcf/d of access to LNG export terminals.
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