(Bloomberg,Friday, October 18, 2019) -- DTE Energy Co. agreed to buy a natural gas gathering system and pipeline in Louisiana for $2.25 billion to boost capacity to supply the Gulf Coast, where demand is growing among power and industrial customers.

Detroit-based DTE said Friday it’s buying the assets from closely held Momentum Midstream and Indigo Natural Resources in cash. The acquisition, which is expected to close this quarter, includes an additional $400 million payment upon the completion of a pipeline in the second half of 2020.

DTE is a diversified energy company that has operated for more than 30 years, starting out in Michigan, where it supplies electricity, before moving into the Barnett Shale basin in Texas and, more recently, Appalachia. The Louisiana deal comes eight months after a DTE joint venture agreed to buy Generation Pipeline, a natural gas conduit in Ohio.

Momentum is closely held and backed by investors including Yorktown Energy Partners. Closely held Indigo is the primary supplier of gas to the assets being sold to DTE.

“This acquisition is highly accretive, has world-class resources, has excellent access to large markets, and is in the early- to mid-cycle development phase,” DTE Chief Executive Officer Jerry Norcia said in a statement. “It checks all of our boxes.”

DTE’s shares have advanced 17% this year, compared with a 20% advance in the Standard & Poor’s 500 Utilities Index.

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