DT Midstream to Build New Utica Shale Infrastructure

DT Midstream Inc. (DTM) is ramping up investment in greenfield and other growth projects, including a buildout of infrastructure in Ohio’s Utica Shale, the company said in its second-quarter 2023 report released on Aug. 1.

The company reached a finalized development plan for an emerging associated gas resource development area in the Utica, where E&Ps such as EOG Resources have been developing what it calls its “Ohio Utica Combo” play.

DTM expects to invest approximately $100 million in the next year to develop the area with an initial gathering backbone buildout of more than 200 MMcf/d, according to the company’s second-quarter 2023 earnings presentation.

DTM’s plan is to develop a large-scale, multi-year natural gas gathering system to transport gas from wells in the Utica and integrate the resource with DTM’s downstream assets, including the Nexus and Vector pipelines and the Detroit-area’s Washington 10 Storage Complex, according to the company’s earnings call.

DT Midstream also provided updates on its carbon capture and sequestration (CCS) project in Louisiana, announcing it is on track for the project’s projected timeline with the filing of a Class V characterization well permit application.

So far in 2023, DTM has invested approximately $15 million into the Louisiana CCS project, which entails capture equipment, a new CO₂ pipeline and storage development, and targets a proximal geological storage formation with a capacity of over 1 million tonnes per annum, according to the earnings presentation. 

DTM plans to drill its Class V characterization well in fourth quarter 2023 and reach final investment decision in the first half of 2024. In fourth quarter 2024, DTM expects Class VI permit approval and by fourth quarter 2025, DTM expects full project in-service.

The project’s economics are fully supported by the Inflation Reduction Act’s 45Q CO₂ storage tax credit and is “a very economic project for investors,” David Slater, president and CEO, said in the company’s second quarter 2023 earnings call.

The project will also reduce DTM’s CO₂ emissions, in line with the company’s goal of net zero emissions by 2050.

Slater also said DTM’s Haynesville LEAP pipeline expansion project is running ahead of schedule and that the company expects an early fourth quarter 2023 in-service date for its first phase.

Capital outlook unchanged

DTM shifted approximately $100 million in capital originally allocated for 2024 into 2023 for the development of the Ohio Utica opportunity. However, the company stayed in line with the $0.8 billion in total capital committed for 2023 and 2024, Slater said.

As a result, DTM is increasing its 2023 growth capex guidance to between $700 million and $750 million while lowering 2024 committed growth capex by $100 million, Jeff Jewell, executive vice president and CFO, said in the earnings call.

Even with the company’s acceleration of new greenfield investment, its 2023-2027 overall growth capital outlook remains unchanged. DTM projected capex of between $1.7 billion and $2.2 billion, the company said in the second quarter presentation.

DTM reported its net income for second-quarter 2023 as $91 million, or $0.93 per diluted share. Operating earnings were $91 million, or $0.93 per diluted share, and adjusted EBITDA for the quarter was $224 million, Jewell said in the earnings call.

DTM’s board of directors also declared a $0.69 per share dividend on its common stock, payable on Oct. 15 to stockholders on record as of Sept. 18, the company said in the release.