WGL Midstream, a WGL Holdings Inc. (NYSE:WGL) company, has exercised an option for an $89 million equity investment in the Stonewall Gas Gathering System, representing a 35% ownership stake. The system initiated operations in November 2015 and is currently gathering one billion cubic feet of natural gas daily from the Marcellus production region in West Virginia and delivering it to an interstate pipeline system to meet demand from markets in the mid-Atlantic region.
WGL Midstream secured an option to invest in the Stonewall system as part of an existing supply agreement with Antero Resources Corp., a natural gas operator in the Marcellus and Utica shale region and the current primary shipper in Stonewall. The agreement with Antero includes a firm sales agreement for 330,000 Dth/day to supply mid-Atlantic markets and WGL customers such as GAIL Global (USA) LNG LLC, a subsidiary of GAIL (India) Ltd. In 2014, WGL Midstream executed a gas sale and purchase and capacity agreement with GAIL to sell up to 430,000 Dth/day of natural gas, for a term of approximately 20 years, starting on the in-service date of the Cove Point LNG export facility. WGL Midstream expects that the majority of this natural gas would be supplied through its agreement with Antero.
WGL Midstream’s ownership percentage would drop to 30% during fiscal year 2016 if other participants join the project as expected.
Other Stonewall investors include M3 Midstream LLC and Vega Energy Partners. M3 Midstream serves as majority owner and operates Stonewall Gas Gathering LLC.