US energy group DTE Energy has reached agreements with m3 Midstream and Vega Energy Partners to acquire gas midstream assets in the United States for a total consideration of US$1.3bn. The transactions are expected to be completed in the fourth quarter of 2016.
DTE will acquire 100% of Appalachia Gathering System (AGS), located in Pennsylvania and West Virginia, and 40% of Stonewall Gas Gathering (SGG), in West Virginia, from m3 Midstream. In addition, DTE will purchase 15% of SGG from Vega Energy Partners. These assets will become part of the DTE's non-utility Gas Storage and Pipeline business which currently includes a network of natural gas gathering, transmission and storage facilities serving the Midwest, Ontario and Northeast markets.
Demand for natural gas in the Great Lakes region is expected to increase significantly, driven by coal to gas conversions for electricity generation and economic growth. The low-cost natural gas supply from the Marcellus/Utica region is expected to serve this growth and displace higher cost alternatives.