Equitrans Midstream Corporation operates as a natural gas gatherer in the U.S. The company holds a significant transmission footprint in the Appalachian Basin.
The company provides midstream services to its customers in Pennsylvania, West Virginia and Ohio through its three primary assets: the gathering system, which includes predominantly dry gas gathering systems of high-pressure gathering lines; the transmission system, which includes the United States Federal Energy Regulatory Commission (F...
Equitrans Midstream Corporation operates as a natural gas gatherer in the U.S. The company holds a significant transmission footprint in the Appalachian Basin.
The company provides midstream services to its customers in Pennsylvania, West Virginia and Ohio through its three primary assets: the gathering system, which includes predominantly dry gas gathering systems of high-pressure gathering lines; the transmission system, which includes the United States Federal Energy Regulatory Commission (FERC)-regulated interstate pipelines and storage systems; and the water network, which primarily consists of water pipelines, storage and other facilities that support well completion and produced water handling activities.
As of December 31, 2023, the company provided a majority of its natural gas gathering, transmission and storage services and water services under long-term contracts that generally include firm reservation fee revenues. For the year ended December 31, 2023, approximately 70% of the company's operating revenues were generated from firm reservation fee revenues. Generally, the company focuses on utilizing contract structures reflecting long-term firm capacity, MVC (Minimum volume commitment) or ARC (Annual Revenue Commitments) commitments which are intended to provide support to its cash flow profile. The percentage of the company's operating revenues that are generated by firm reservation fees (as well as the company's revenue generally) may vary year to year depending on various factors, including customer volumes and the rates realizable under the company's contracts, including the EQT Global GGA (certain Gas Gathering and Compression Agreement entered into on February 26, 2020 (the EQT Global GGA Effective Date) by the company with EQT and certain affiliates of EQT for the provision of certain gas gathering services to EQT in the Marcellus and Utica Shales of Pennsylvania and West Virginia, as subsequently amended), which provides for periodic gathering MVC fee declines through January 1, 2028 (with the fees then remaining fixed throughout the remaining term).
The company's operations are focused primarily in southwestern Pennsylvania, northern West Virginia and southeastern Ohio, which are prolific resource development areas in the natural gas shale plays known as the Marcellus and Utica Shales. These regions are also the primary operating areas of EQT, the company's largest customer, which was one of the largest natural gas producers in the United States based on average daily sales volumes as of December 31, 2023. EQT (EQT Corporation and its subsidiaries.) accounted for approximately 61% of the company's revenues for the year ended December 31, 2023.
Business Segments
The company operates through three segments: Gathering, Transmission and Water.
The company's three business segments correspond to its three primary assets: the gathering system, transmission and storage system and water service system.
Gathering Customers
For the year ended December 31, 2023, EQT accounted for approximately 59% of Gathering's throughput and approximately 62% of Gathering's revenues. Subject to certain exceptions and limitations, as of December 31, 2023, Gathering (inclusive of acreage dedications to Eureka Midstream Holdings, LLC (Eureka Midstream), a joint venture in which the company is the operator and has a 60% interest) had significant acreage dedications through which the company has the right to elect to gather all natural gas produced from wells under dedicated areas in Pennsylvania pursuant to agreements with EQT, including the EQT Global GGA, and agreements with certain other third parties, West Virginia pursuant to agreements with EQT, including the EQT Global GGA, and agreements with certain other third parties, and Ohio pursuant to agreements with various third parties.
The company provides gathering services in two manners: firm service and interruptible service. Firm service contracts are typically long-term and often include firm reservation fees, which are fixed, monthly charges for the guaranteed reservation of pipeline access. Revenues under firm reservation fees also include fixed volumetric charges under MVCs. As of December 31, 2023, the gathering system had total contracted firm reservation capacity (including contracted MVCs) of approximately 7.7 billion cubic feet (Bcf) per day (inclusive of Eureka Midstream contracted capacity), which included contracted firm reservation capacity of approximately 1.8 Bcf per day associated with the company's high-pressure header pipelines. Including future capacity expected from expansion projects that are not yet fully constructed or not yet fully in-service for which the company has executed firm contracts, the gathering system had total contracted firm reservation capacity (including contracted MVCs) of approximately 8.8 Bcf per day (inclusive of Eureka Midstream contracted capacity) as of December 31, 2023, which included contracted firm reservation capacity of approximately 1.9 Bcf per day associated with the company's high-pressure header pipelines. Volumetric-based fees can also be charged under firm contracts for each firm volume gathered, as well as for volumes gathered in excess of the firm contracted volume. Based on total projected contractual revenues, including projected contractual revenues from future capacity expected from expansion projects that are not yet fully constructed or not yet fully in-service for which the company has executed firm contracts, the company's firm gathering contracts had a weighted average remaining term of approximately 13 years as of December 31, 2023.
Transmission Customers
For the year ended December 31, 2023, EQT accounted for approximately 61% of Transmission's throughput and approximately 51% of Transmission's revenues. As of December 31, 2023, Transmission had an acreage dedication from EQT through which the company had the right to elect to transport all gas produced from wells drilled by EQT under dedicated areas in Allegheny, Washington and Greene Counties in Pennsylvania and Wetzel, Marion, Taylor, Tyler, Doddridge, Harrison and Lewis Counties in West Virginia. The company's other customers include LDCs, marketers, producers and commercial and industrial users. The company's transmission and storage system provides customers with access to markets in Pennsylvania, West Virginia and Ohio and to the Mid-Atlantic, Northeastern, Midwestern and Gulf Coast markets through interconnect points with major interstate pipelines.
The company provides transmission and storage services in two manners: firm service and interruptible service. Firm service contracts are typically long-term and often include firm reservation fees, which are fixed, monthly charges for the guaranteed reservation of pipeline and storage capacity. Volumetric-based fees can also be charged under firm contracts for firm volume transported or stored, as well as for volumes transported or stored in excess of the firm contracted volume. As of December 31, 2023, the company had firm capacity subscribed under firm transmission contracts of approximately 5.8 Bcf per day, which includes future capacity expected from expansion projects that are not yet fully constructed or not yet fully in-service for which the company has executed firm transmission contracts and excludes approximately 2.6 Bcf per day of firm capacity commitments associated with the MVP and MVP Southgate projects. As of December 31, 2023, the company had firm storage capacity of approximately 29.8 Bcf subscribed under firm storage contracts. Based on total projected contractual revenues, including projected contractual revenues from future capacity expected from expansion projects that are not yet fully constructed or not yet fully in-service for which the company has executed firm contracts, the company's firm transmission and storage contracts had a weighted average remaining term of approximately 12 years as of December 31, 2023.
As of December 31, 2023, approximately 97% of Transmission's contracted firm transmission capacity was subscribed by customers under negotiated rate agreements under its tariff. As of December 31, 2023, Transmission had minimal contracted firm transmission capacity subscribed at discounted rates and recourse rates under its tariff.
Water Customers
For the year ended December 31, 2023, EQT accounted for approximately 96% of Water's revenues. The company has the exclusive right to provide fluid handling services to certain EQT-operated wells through 2029 (and thereafter such right will continue on a month-to-month basis) within areas of dedication in Belmont County, Ohio, including the delivery of fresh water for well completion operations and the collection and recycling or disposal of flowback and produced water. The company also provides water services to other customers operating in the Marcellus and Utica Shales.
Assets
Gathering Assets
As of December 31, 2023, the gathering system, inclusive of Eureka Midstream's gathering system, included approximately 1,220 miles of high-pressure gathering lines, 138 compressor units with compression of approximately 491,000 horsepower and multiple interconnect points with the company's transmission and storage system and to other interstate pipelines.
Transmission and Storage Assets
As of December 31, 2023, the transmission and storage system included approximately 940 miles of FERC-regulated, interstate pipelines that have interconnect points to seven interstate pipelines and multiple local distribution companies (LDCs). As of December 31, 2023, the transmission and storage system was supported by 42 compressor units, with total throughput capacity of approximately 4.4 Bcf per day and compression of approximately 135,000 horsepower, and 18 associated natural gas storage reservoirs, which had a peak withdrawal capacity of approximately 820 million cubic feet (MMcf) per day and a working gas capacity of approximately 43 Bcf.
Water Assets
As of December 31, 2023, the fresh water systems included approximately 201 miles of pipeline that deliver fresh water from local municipal water authorities, the Monongahela River, the Ohio River, local reservoirs and several regional waterways. In addition, as of December 31, 2023, the fresh water systems consisted of permanent, buried pipelines, surface pipelines, 17 fresh water impoundment facilities, as well as pumping stations, which support water transportation throughout the systems, and take point facilities and measurement facilities, which support well completion activities. During 2023, the company completed the majority of the main trunkline pipelines on the mixed water system, including a pipeline that connects its two mixed water storage facilities. As of December 31, 2023, the mixed water system included approximately 53 miles of buried pipeline and two water storage facilities with 350,000 barrels of capacity, as well as two interconnects with the company’s existing Pennsylvania fresh water systems and provides services to producers in southwestern Pennsylvania. The company plans to continue to expand its mixed water system in 2024, including the completion of a pipeline to serve a producer in West Virginia and a water pipeline, scheduled to be completed in the first quarter of 2025, to interconnect with the same producer's Pennsylvania mixed water network.
Developments
The company's strategically located and integrated assets overlay core acreage in the Appalachian Basin. The location of the company's assets allows its producer customers to access major demand markets in the U.S. The company is one of the largest natural gas gatherers in the U.S., and its largest customer, EQT, was one of the largest natural gas producers in the U.S. based on average daily sales volumes as of December 31, 2023, and EQT's public senior debt had investment grade credit ratings from Standard & Poor's Global Ratings (S&P), Fitch Ratings (Fitch) and Moody's Investors Service (Moody's) as of that date. For the year ended December 31, 2023, approximately 70% of the company's operating revenues were generated from firm reservation fee revenues.
The company's standalone strategy reflects its continued pursuit of organic growth projects, including completing and placing in service the MVP, focusing on identifying opportunities to use its existing assets to deepen and grow its customer relationships at optimized levels of capital spending and taking into account the company’s leverage, and continuing to prudently invest resources in its sustainability-oriented initiatives. The company’s strategy also reflects its continued focus on achieving a strong balance sheet, and given its size, operating footprint and other factors considering inorganic opportunities, such as to extend its operations into the southeast United States and new, key demand markets, such as the Gulf of Mexico LNG (liquefied natural gas) export market.
Mountain Valley Pipeline
The MVP is being constructed by a joint venture among the company and affiliates of each of NextEra Energy, Inc. (NEE), Consolidated Edison, Inc. (Con Edison), AltaGas Ltd. and RGC Resources, Inc. (RGC). As of December 31, 2023, the company owned an approximate 48.4% interest in the MVP project and will operate the MVP. The MVP is an estimated 300-mile, 42-inch diameter natural gas interstate pipeline with a targeted capacity of 2.0 Bcf per day that is designed to span from the Company's existing transmission and storage system in Wetzel County, West Virginia to Pittsylvania County, Virginia, which will provide access to the growing southeast demand markets once it is placed in-service. The MVP Joint Venture has secured a total of 2.0 Bcf per day of firm capacity commitments at 20-year terms. Additional shippers have expressed interest in the MVP project and the MVP Joint Venture is evaluating an expansion opportunity that could add approximately 0.5 Bcf per day of capacity through the installation of incremental compression.
In October 2017, the FERC issued the Certificate of Public Convenience and Necessity for the MVP. In the first quarter of 2018, the MVP Joint Venture received limited notice to proceed with certain construction activities from the FERC and commenced construction. As of February 15, 2024, the MVP Joint Venture, among other things, has completed approximately 300 miles of pipeline installed (less than 4 miles remaining to install); 415 crossings (13 remaining); the hydrotesting of approximately 180 miles (approximately 125 miles remain to be tested, inclusive of interconnect piping); the purging and packing of the pipeline through to the second compressor station (total of approximately 77 miles); the commissioning of two of three MVP compressor stations; and restoration of a substantial portion of the pipeline right of way, with the remaining approximately 112 miles of pipeline restoration to occur following MVP in-service.
Wellhead Gathering Expansion Projects and Hammerhead Pipeline
The primary projects include infrastructure expansion and optimization in core development areas in the Marcellus and Utica Shales in southwestern Pennsylvania, southeastern Ohio and northern West Virginia for EQT, Range Resources Corporation (Range Resources) and other producers.
The Hammerhead pipeline is a 1.6 Bcf per day gathering header pipeline that is primarily designed to connect natural gas produced in Pennsylvania and West Virginia to the MVP, Texas Eastern Transmission and Eastern Gas Transmission, is supported by a 20-year term, 1.2 Bcf per day, firm capacity commitment from EQT. The company expects Hammerhead pipeline full commercial in-service to commence in conjunction with full MVP in-service and is focused on obtaining additional firm capacity commitments and/or additional interruptible volumes for the pipeline. During the fourth quarter of 2023, the company provided firm and interruptible volumes from its Hammerhead Gathering agreement with EQT and expects to continue the interruptible volumes up to the full commercial in-service date of the Hammerhead pipeline when firm commitments will commence.
The company also has an agreement with a producer customer to install approximately 32,000 horsepower booster compression to existing facilities. The project is backed by a long-term firm commitment and is expected to be in-service in the first quarter of 2024. The majority of spend on the project was incurred in 2023.
Transmission Projects
The company expects OVCX will increase deliverability on its existing Ohio Valley Connector pipeline (OVC) by approximately 350 MMcf per day, create new receipt and delivery transportation paths, and enhance long-term reliability. The project is primarily supported by new long-term firm capacity commitments of 330 MMcf per day, as well as an extension of approximately 1.0 Bcf per day of existing contracted mainline capacity for EQT. OVCX is designed to meet growing demand in key markets in the mid-continent and gulf coast through existing interconnects with long-haul pipelines in Clarington, Ohio. On January 20, 2023, the FERC issued the Final Environmental Impact Statement for the project. On June 15, 2023, the FERC issued the Certificate of Public Convenience and Necessity for OVCX. On July 31, 2023, the FERC issued the Notice to Proceed and the company commenced construction during the third quarter of 2023.
The company's EEP project is designed to provide north-to-south capacity on the mainline Equitrans, L.P. system, including primarily for deliveries to the MVP. A portion of the EEP commenced operations with interruptible service in the third quarter of 2019. The EEP provides capacity of approximately 600 MMcf per day and offers access to several markets through interconnects with Texas Eastern Transmission, Eastern Gas Transmission and Columbia Gas Transmission. In connection with MVP full in-service, firm transportation agreements for 550 MMcf per day of capacity will commence under 20-year terms.
MVP Southgate Project
In December 2023, the MVP Joint Venture announced an amended MVP Southgate project in lieu of the original project. The amended project would extend approximately 31 miles from the terminus of the MVP in Pittsylvania County, Virginia to planned new delivery points in Rockingham County, North Carolina using 30-inch diameter pipe. The MVP Southgate project, which was announced in April 2018, previously contemplated an approximate 75-mile interstate pipeline that was approved by the FERC to extend from the MVP at Pittsylvania County, Virginia to new delivery points in Rockingham and Alamance Counties, North Carolina. The company is expected to operate the MVP Southgate project and owned a 47.2% interest in the MVP Southgate project as of December 31, 2023.
Water Operations
The company placed portions of the initial mixed-use water system in service during 2022 and its second above ground water storage facility into service in July 2023, which brings its total water storage capacity to 350,000 barrels. During 2023, the company completed the majority of the main trunkline pipelines on the mixed water system, including a pipeline that connects its two mixed water storage facilities. In May 2023, the company executed an agreement with a producer customer to provide mixed-use water delivery service.
Regulatory Environment
The company's interstate natural gas transmission and storage operations are regulated by the FERC under the Natural Gas Act of 1938, as amended (NGA); the Natural Gas Policy Act of 1978, as amended (NGPA); and the regulations, rules and policies promulgated under those and other statutes. The company's FERC-regulated operations are pursuant to tariffs approved by the FERC that establish rates (other than market-based rate authority), cost recovery mechanisms and terms and conditions of service to its customers.
The company's interstate natural gas pipeline system and natural gas storage assets are subject to regulation by Pipeline and Hazardous Materials Safety Administration of the United States Department of Transportation.
The company continues to work with the U.S. Department of Homeland Security's Transportation Safety Administration (TSA) to ensure compliance with the security directives and is implementing the requirements of those security directives, as needed.
The company is subject to a number of federal and state laws and regulations, including the federal Occupational Safety and Health Act and comparable state statutes, whose purpose is to protect the health and safety of workers. In addition, the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) hazard communication standard, the U.S. Environmental Protection Agency (EPA) community ‘right-to-know’ regulations and comparable state laws and regulations require that information be maintained concerning hazardous materials used or produced in the company's operations and that this information be provided to employees, state and local government authorities and citizens.
The company generates materials in the course of its ordinary operations that are regulated as ‘hazardous substances’ under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) or similar state laws.
In the ordinary course of the company's operations, the company generates wastes constituting solid wastes, and in some instances hazardous wastes, which are subject to the requirements of the Resource Conservation and Recovery Act (RCRA) and comparable state statutes.
The federal Clean Air Act and comparable state laws and regulations restrict the emission of air pollutants from various industrial sources, including the company's compressor stations, and also impose various monitoring and reporting requirements.
History
Equitrans Midstream Corporation, a Pennsylvania corporation, was founded in 2018. The company was incorporated in 2018.
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