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Columbia Gas parent to spin off pipeline operations

| Sunday, Sept. 28, 2014, 3:21 p.m.

The parent company of Western Pennsylvania's largest natural gas utility said Sunday it will split off its pipeline operations into a separate, publicly traded company.

Merrillville, Ind.-based NiSource said it did not expect the separation of Columbia Pipeline Group to affect employment levels at its operations, which include Columbia Gas of Pennsylvania. That utility has about 417,000 customers and 7,350 miles of pipe in 26 counties, including Armstrong, Allegheny, Beaver, Butler, Fayette, Washington and Westmoreland. NiSource has 3.4 million customers in seven states.

In a related announcement, NiSource said it would establish what's known as a master limited partnership to help Columbia Pipeline raise cash. Similar moves have become popular among energy companies looking to get a piece of the shale gas boom. Downtown-based EQT Corp. and Cecil-based Consol Energy Inc. are among companies producing gas from the Marcellus and Utica shale that recently formed MLPs to operate what they call midstream assets.

Forming such a partnership provides tax advantages while allowing companies to generate investments in their pipeline, gathering and processing operations.

Columbia Pipeline will operate 15,000 miles of transmission lines and nearly 300 billion cubic feet of underground gas storage capacity once the separation is final next year, NiSource said.

Company officials planned to discuss the split further during an investor meeting Monday morning.

Columbia said last month it would spend $1.75 billion to build a pipeline and improve a line to move more natural gas from the growing Marcellus and Utica shale fields to Midwest and Gulf Coast markets.

The projects are set to come online in 2017. The 160-mile Leach XPress project will begin construction in 2016 in Ohio and West Virginia, with the goal of connecting gas wells to the company's Columbia Gulf system in Leach, Ky., the following year. The Rayne XPress project will add capacity to Columbia Gulf, which extends to the Gulf Coast.

Producers that signed on for those pipelines include Fort Worth-based Range Resources, a dominant producer in Pennsylvania with a regional headquarters in Cecil, and Houston-based Noble Energy, a partner with Consol that is building a regional headquarters in Cecil.

David Conti is a staff writer for Trib Total Media. He can be reached at 412-388-5802 or dconti@tribweb.com.

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