Questar Pipeline owns and operates Federal Energy Regulatory Commission-regulated natural gas transmission and storage assets in Colorado, Utah and Wyoming, US.
Proceeds from the sale will be used by Dominion to reduce its outstanding debt while supporting earnings and dividend growth targets.
Dominion president, chairman and CEO and Dominion Midstream chairman and CEO Thomas Farrell II said:"Dominion Midstream's planned acquisition of Questar Pipeline and related financing have been anticipated as part of the financing structure of the Dominion-Questar Corporation combination since it was announced in February 2016.
“The dropdown will also provide Dominion Midstream with additional earnings to support its best-in-class growth rate, without another asset drop or additional equity, until the second half of 2018.
"This successful financing also validates our business plan for Dominion Midstream, which involves accessing the capital markets to fund the acquisition of midstream assets to support the partnership's stated intention to grow distributions by 22 percent per year."
The transaction is scheduled to be completed on 1 December 2016.
Dominion Midstream expects the acquisition of Questar Pipeline to be immediately accretive to its distributable cash flow and contribute to a distribution growth rate of 22% per year.
It is also expected to more than double its existing adjusted earnings before interest, tax, depreciation and amortization (EBITDA), the company said.
