Algonquin Power & Utilities Corp. (APUC) will participate in the development of Kinder Morgan Inc.’s proposed Northeast Energy Direct natural gas pipeline project.

Liberty Utilities (Pipeline & Transmission) Corp., a wholly owned subsidiary of APUC and Kinder Morgan Operating LP, agreed to form a new entity, called Northeast Expansion LLC, to develop, construct and own a 30-inch or 36-inch gas transmission pipeline. The planned location for the pipeline is between Wright, N.Y., and Dracut, Mass. The project is scalable up to 2.2 billion cubic feet per day. Capacity on the pipeline will be contracted with local distribution utilities and other customers to help ease constraints on gas supply in the northeast U.S. and ensure reliability to the power-generation grid. The project is expected to receive Federal Energy Regulatory Commission approval in fourth-quarter 2016, with commercial operations beginning by late 2018.

Under the agreement, APUC will subscribe for an initial 2.5% interest in Northeast Expansion LLC, with an opportunity to increase its participation up to 10%. The total capital investment opportunity for APUC could reach $400 million, depending on the final configuration and design capacity.