After a relatively quiet 2016 for midstream transactions, the sector wrenched out multiple pipeline deals in a two-day span as the third quarter comes to a close.

Midstream deals totaled more than $3.8 billion in the last week of September.

Among them: Detroit utility DTE Energy said it would pay $1.3 billion to purchase midstream assets that connect the southwest Marcellus and dry Utica to markets in Michigan, Ohio, Chicago and Ontario, Canada.

DTE’s purchase includes all interest in M3 Midstream’s Appalachia Gathering System in Pennsylvania and West Virginia. DTE also agreed to buy M3’s 40% interest and Vega Energy Partners’ 15% stake in Stonewall Gas Gathering (SGG) in West Virginia.

“Antero Resources has the option to sell us an additional 15% of the SGG assets for $150 million, which would raise our investment to $1.45 billion,” Gerry Anderson, CEO of DTE Energy, said on a Sept. 27 conference call. He said he would soon learn the company’s decision.

The acquisition follows other utilities that have grown their midstream footprints to support longer-term growth in an environment of little to no load growth, Tudor, Pickering, Holt and Co. (TPH) said in a Sept. 27 report. But the deal still requires DTE Energy’s NEXUS Gas Transmission pipeline, which is being developed in Ohio and Michigan. The line is under review by the Federal Energy Regulatory Commission (FERC).

“Synergies and upside from this deal will be heavily dependent on the completion of NEXUS, which has yet to cross the finish line,” TPH said.

Jerry Norcia, DTE Energy president and COO, said he expects to receive FERC’s final environmental impact statement in November.

“That’s on schedule and happening,” Norcia said during the DTE conference call. “We’ve got pipe being delivered to storage yards and handling yards. We’ve got all of our contractors lined up.”

Norcia said he expects a formal FERC order by January or February and “shovels in the ground” by spring.

The acquired pipeline assets will become part of DTE's non-utility gas storage and pipeline business, which owns and manages a network of natural gas gathering, transmission and storage facilities serving Ontario and the U.S. Midwest and Northeast markets, the company said.

DTE Energy said natural gas demand is expected to increase in the Great Lakes region, driven by coal-to-gas switching for electricity generation and economic growth. Low-cost natural gas supply from the Marcellus/Utica region is expected to serve this growth and displace higher-cost alternatives, the company said.

The assets overlay about 40 trillion cubic feet (Tcf) of Marcellus natural gas resources, enough to fill the acquired systems for more than 40 years, DTE said.

“These transactions will significantly increase our midstream presence in the Appalachian Basin,” Anderson said.

The transactions, which are expected to be completed in fourth-quarter 2016, will not materially change DTE's current business mix.

“The decision to purchase these assets is consistent with DTE's growth plans,” Norcia said. “These two systems are complementary to our current asset portfolio and will provide synergies over time.”

DTE said the transaction will be accretive to earnings per share beginning in 2017 and 10-cents accretive in 2020.

Wells Fargo Securities LLC served as the exclusive financial adviser to DTE and Wells Fargo Bank NA provided committed financing for the transaction.

Vinson & Elkins advised M3 Midstream on the sale of its midstream assets.

Darren Barbee can be reached at dbarbee@hartenergy.com.

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