The line will serve as a gathering system for Marcellus shale wells in Butler, Armstrong, Allegheny, Indiana and Westmoreland counties.
Construction of the pipeline has started in the Alle-Kiski Valley.
The $150 million pipeline project, formerly known as the Lancer Line, has been renamed the Big Pine Gathering System.
NiSource plans to replace a dormant 55-mile, 10-inch Buckeye pipeline with a combination 20- or 24-inch high pressure line. The company will lay new pipe to extend the line on both ends of the former Buckeye line.
"(XTO), along with other producers in the area, will now have the capacity and access to markets needed in this burgeoning shale gas development play in Western Pennsylvania by the end of the year," Jimmy Staton, NiSource executive vice president, said in a written statement.
The system is expected to provide an initial capacity of about 425 million cubic feet of natural gas per day.
NiSource, which owns Columbia Gas Transmission, parent company of Columbia Gas of Pennsylvania, plans to connect the pipeline with its own transmission line as well as Texas Eastern Transmission and Dominion Transmission lines.