(Reuters) - Energy Transfer Partners L.P. (ETP.N) said on Monday it would sell a 32.44 percent stake in a firm associated with the Rover pipeline project to Blackstone funds for about $1.57 billion.
The 700-mile Rover pipeline, the biggest natural gas pipeline under construction in the United States, is designed to transport 3.25 billion cubic feet per day of domestically produced natural gas from the Marcellus and Utica Shale production areas to markets across the United States as well as Canada.
Construction of the $4.2-billion Rover pipeline has hit several roadblocks in recent weeks.
West Virginia’s Department of Environmental Protection told the company last week to stop some work, citing environmental violations.
The pipeline already faces sanctions for violations in Ohio and a federal ban on drilling activity that has delayed the anticipated startup of the project’s first phase to the late summer from July.
The Federal Energy Regulatory Commision on May 10 banned Energy Transfer from starting new horizontal directional drilling under waterways and roads following the release of about 2 million gallons of drilling fluid, a clay and water mix, into Tuscarawas River wetlands in Ohio.
Blackstone Energy Partners and Blackstone Capital Partners will buy a 49.9 percent interest in ET Rover Pipeline LLC, or HoldCo, according to the agreement.
The HoldCo owns a 65 percent interest in Rover Pipeline LLC. The two companies are constructing the Rover pipeline and will be the operator of the pipeline once in service, Energy Transfer said.
Energy Transfer, which also operates the $3.8 billion Dakota Access Pipeline, said it planned to use the proceeds to pay down debt and help fund its current projects.
The deal is expected to close in the fourth quarter, the company said.
Upon closing, the HoldCo will be 50.1 percent owned by Energy Transfer and 49.9 percent by Blackstone.
Reporting by John Benny in Bengaluru; Editing by Sriraj Kalluvila