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DTE Energy, Southwestern Sign Bluestone Expansion Deal

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Detroit, MI-based DTE Energy Company (DTE) has struck a deal with oil and gas energy company, Southwestern Energy Co. (SWN), to expand its in-field natural gas gathering system in Susquehanna County, PA, by 50%. Robust Marcellus reserves in Susquehanna County have driven the need for added infrastructure.

The agreement boosts Southwestern’s transportation capacity on the Bluestone pipeline and firms up DTE Energy’s five-year outlook in its gas gathering business. Marcellus gas production for Southwestern rose 47% year over year to 66 billion cubic feet (Bcf) in the third quarter 2014. This Houston-based oil and gas company has big plans in Appalachia after agreeing in October to pay $5.38 billion to Chesapeake Energy Corp. (CHK) for 413,000 net acres and 1,500 wells in southern Pennsylvania and northern West Virginia.

DTE Energy’s two-year-old Bluestone pipeline is 44.5 miles long that can ship up to 0.8 Bcf per day of natural gas to Millennium Pipeline in Broome County, NY and Tennessee Gas Pipeline in Susquehanna County. Plans are now to boost the pipeline’s capacity to 1.0 Bcf/d by mid-2016. The Bluestone Gathering System delivers Marcellus Shale gas in Pennsylvania and New York through the Millennium and Tennessee pipelines.

Marcellus Shale, located across New York, Pennsylvania, West Virginia, Ohio and Maryland, is rich in natural gas. As per the U.S. Energy Information Administration report, published in Nov 12, 2014, natural gas marketed production is expected to grow at an annual rate of 4.8% in 2014 and 2.3% in 2015.

DTE Energy’s Gas Storage and Pipelines business is evaluating new pipeline and storage investment opportunities and is steadily working on its growth plan. The various projects in its portfolio include the Bluestone pipeline, Vector Pipeline, Millennium Pipeline, and Nexus Gas Transmission System.

DTE Energy is a holding company with subsidiaries engaged in regulated and unregulated energy businesses. Its Gas Storage and Pipelines division is engaged in natural gas pipelines, and gathering and storage businesses, through DTE Pipeline and DTE Gas Storage. This segment owns partnership interests in two interstate transmission pipelines and controls two natural gas storage fields. The pipeline and storage assets are primarily supported by long-term, fixed-price revenue contracts.

DTE Energy currently has a Zacks Rank #3 (Hold). Better-ranked stock in the energy space is Black Hills Corporation (BKH) with a Zacks Rank #1 (Strong Buy).

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