Con Edison to form joint venture with Crestwood

OREANDA-NEWS. April 22, 2016. Electricity and natural gas distribution company Con Edison has agreed to buy a 50pc stake in Crestwood Equity Partners gas pipeline and storage assets in southern New York and Pennsylvania for \\$975mn in debt and equity.

The assets will be operated by Stagecoach Gas Services, a joint venture between Crestwood and Con Edison. Crestwood will manage that partnership, overseeing 41 Bcf (1.2bn m) of storage and three gas pipelines that have a combined capacity of about 3 Bcf/d.

The transaction is scheduled to close in June 2016 and includes the MARC I, North/South and East pipelines that serve customers in New York and Pennsylvania. The storage sites connect to Tennessee Gas pipeline's 300 and 400 lines, the Millennium pipeline and Transcontinental Gas pipeline's Leidy line.

Crestwood is taking steps to cut costs and reduce debt as a slump in oil and natural gas prices. The price downturn has raised questions about the future of companies that have built large infrastructure projects for now struggling producers.

The northeast US is one of the most prolific gas-producing regions in the US. But gas prices there are among the lowest in the country because of rapid output growth and pipeline constraints.

"The partnership with Con Edison will reposition Crestwood's Northeast pipeline and storage assets to more effectively compete for future expansion opportunities as Northeast demand for natural gas increases in the future," Crestwood's chief executive Robert Phillips said today.

Earlier this year, Con Edison agreed to purchase a 12.5pc stake in the \\$3.5bn Mountain Valley pipeline. That 300-mile, 42-inch diameter line will extend EQT Midstream Partners' Equitrans gas transmission and storage system in the northeast, providing at least 2 Bcf/d to the mid- and south Atlantic states.

The project, a joint venture between EQT Midstream, NextEra Energy and WGL Holdings and Vega Energy, is scheduled to begin service in the fourth quarter of 2018.

In addition, a subsidiary of Con Edison, Con Edison Transmission, reached a 20-year agreement for firm transportation rights on Mountain Valley to move about 250mn cf/d.

Con Edison is pursuing investments in electric and gas transmission to provide a wider range of customers with low-cost energy supplies, the company has said.