Cabot Oil & Gas Corp. has agreed to a gas sales deal with a subsidiary of WGL Holdings and has tapped Transcontinental Gas Pipe Line Co. LLC (Transco) for a new pipeline with committed takeaway capacity from Cabot’s acreage position in Susquehanna County, Pa.
“This project is very unique in that the producer, the pipeline and the market have collectively combined resources to accomplish the individual goals of each party,” said Dan Dinges, chairman, president and CEO. “Specifically for Cabot, we secure the optimal path for our previously announced Cove Point volumes (350,000 cubic feet per day) and add another sizeable agreement to our portfolio of long-term sales contracts, while utilizing a portion of our future anticipated free cash flow to invest in another infrastructure project.”
The gas sale agreement will provide for 500,000 cubic feet per day of natural gas to be sold to WGL for a primary term of 15 years, commencing with the in-service date of Transco’s Atlantic Sunrise expansion project currently scheduled for the second half of 2017.
The agreement with Transco is for the pipeline company to construct and operate approximately 177 miles of new pipeline, referred to as the Central Penn Line, from the Zick area of Susquehanna County to an interconnect with Transco’s mainline in Lancaster County, Pa. These new facilities are an integral part of Transco’s recently announced Atlantic Sunrise project. Cabot will own 850,000 cubic feet per day of firm capacity on Atlantic Sunrise and will also be participating as an equity owner.
“We are extremely excited to combine this new long-term sales agreement with our previously announced deal with Sumitomo for delivery to Cove Point,” Dinges said. “Collectively, we are adding 850,000 [cubic feet]per day of baseload sales to our marketing effort while securing a firm path for these volumes through the 850,000 [cubic feet]per day of firm capacity on this newly announced pipeline. We have achieved a significant goal of securing new takeaway capacity from the basin with the construction of a new large diameter pipeline that connects our operating area directly to multiple new markets including new pricing opportunities.”