Gas Shipper DT Midstream Eyes Carbon Capture After Spinoff

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(Bloomberg) — DT Midstream Inc., a U.S. gas pipeline operator that started trading Thursday on the New York Stock Exchange, has an eye on carbon capture as it weighs how to seize opportunities emerging from the energy transition.

The company spun-off from DTE Energy Co., a power and gas utility based in Detroit, is “actively working” around technologies to slash its greenhouse-gas emissions and sees carbon sequestration as “the most interesting and the one that will emerge the earliest,” Chief Executive Officer David Slater said in an interview.

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U.S. pipeline companies have increasingly looked at ways to make their vast network of fossil-fuel conduits still relevant in a low-carbon economy, and have mostly abandoned new projects because of fierce opposition from climate advocates. Alternative opportunities include hauling hydrogen or carbon dioxide captured from the air.

Energy companies such as Occidental Petroleum Corp. and Valero Energy Corp. have recently announced plans for carbon sequestration, which climate scientists have long considered an essential component of meeting emission-reduction targets.

“That’s a really attractive way to reduce the carbon footprint and it’s supported by federal tax credits,” Slater said in an interview. “I think that’s going to be one of the first areas on this journey.”

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In the meantime, DT Midstream is focused on expanding the capacity of its existing pipelines through incremental investments as a way to benefit from rising natural gas use. The company operates almost 1,200 miles of pipelines and over 1,000 miles of gathering lines in the gas-rich Marcellus, Utica and Haynesville basins. Opportunities are emerging particularly in Haynesville, a formation that spans parts of Arkansas, Louisiana and East Texas, amid increasing drilling activity and strong demand coming both from domestic markets and exporters of liquefied natural gas, according to Slater.

“We see lots of organic growth,” Slater said. The company expects earnings before interest, taxes and other items to rise as much as 7% to $750 million this year.

Utilities from Dominion Energy Inc. to CenterPoint Energy Inc. to Consolidated Edison Inc. have shed their pipeline businesses as they focus on faster-growing renewables.

DT Midstream traded at $39.25 a share at 10:09 a.m. in New York. Credit Suisse analyst Spiro Dounis earlier made a recommendation equivalent to buy and set a price target of $52 on the stock.

©2021 Bloomberg L.P.

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