Jerry Ashcroft has become president and CEO of the midstream businesses under the EQT Midstream GP Holdings LP (NYSE: EQGP) umbrella more quickly than expected, following the surprise resignation of former EQT CEO Steve Schlotterbeck on March 14.

EQT, now the largest natural gas producer in the U.S. at 4 billion cubic feet per day (Bcf/d), will also become the third-largest natural gas gathering company, following its announcement in February to unlock value with a sum-of-the-parts evaluation, to boost its discounted stock price vs. its peers.

EQT Midstream dates to 2008. Now the plan is that by September, EQT will drop down EQT’s retained midstream assets in an accretive transaction to EQT Midstream Partners (NYSE: EQM). Also, a merger of the latter with Rice Midstream Partners LP (NYSE: RMP) will be an accretive transaction. Morgan Stanley analyst Drew Venker said greater clarity should support a stronger valuation and highlight the hidden value of the midstream assets within the corporate family. The company will sell RMP’s incentive distribution rights (IDRs) to EQT GP Holdings LP.

EQM alone has 950 miles of pipeline and throughput of 2.3 Bcf/d. Parent company EQT boasts 2,500 undeveloped drilling locations in the core of the Marcellus Shale following its November 2017 merger with Rice Energy. Some 2 Bcf/d of committed capacity is firmed up on EQT Midstream Partners including about 1.3 Bcf/d from EQT.

When Ashcroft spoke at Hart Energy’s Marcellus-Utica Midstream in late January in Pittsburgh, he signaled that 2018 “is a big year for us.” Now it has grown bigger, sooner than expected for Ashcroft.

“We’ve got Mountain Valley Pipeline [MVP] and we’re talking already about what we’ll need in 2021-2022 and the best way to meet growing market demand,” he said. “I’m very bullish. You’re probably going to see 20% production growth in Appalachia. The producer debate out there is whether to keep their foot on the accelerator. Is the demand there, is the supply there? I’d say yes.”

Although the new combination will make for a powerful midstream company, Ashcroft will have to manage the ups and downs of getting pipelines built in Appalachia. To get MVP completed and in service by year-end 2018, some 6,000 local people will work simultaneously on nine pipeline spreads to try to finish the huge project quickly, Ashcroft said at MUM.

“Mountain Valley Pipeline is a monumental project,” Ashcroft said. “It’s sized to handle production from both Rice and heritage EQT acreage. It’s a Marcellus supply hub connected to southeast power markets in Virginia.”

The pipeline is a joint venture of NextEra, ConEd, Washington Gas Light (WGL) and RGC (Roanoke Gas Co.)

“It includes promises to 7,000 landowners who want to be safe,” Ashcroft said, detailing the challenges MVP has encountered since the project was sanctioned three years ago. That includes crossing tough, mountainous terrain using steep-slope engineering, Ashcroft said. “EQT is working with the Nature Conservancy, a good partner,” to finesse steep-slope construction, to work around steep grades in high-risk areas.

“You have to be not only competent, but you have to be beyond competent,” Ashcroft said.

EQT has also had to navigate through regulatory delays at the FERC when the agency didn’t have a quorum of commissioners until this past August. FERC approved MVP in October.

Leslie Haines can be reached at lhaines@hartenergy.com.

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