This month, new joint venture teams are cropping up in response to burgeoning plays like the Mississippi Lime and growth demand in areas like the Permian Basin. Hot spots to watch for new construction continue to be in MVP plays like the Marcellus and Utica shale, but rookie plays like the Eagle Ford and Mississippi Lime are fast becoming an industry favorite as rig counts increase in those areas.
First at bat, SemGroup Corp., Gavilon Midstream Energy LLC, a subsidiary of The Gavilon Group, LLC, and an affiliate of Chesapeake Energy Corp. plan to form a joint venture that will construct a 210-mile pipeline in western and northern Oklahoma which will deliver crude oil to a 1 million barrel storage facility in Cushing, Oklahoma. The pipeline and storage facility are a direct result of the increased drilling activity in lucrative areas like the western Oklahoma and the Mississippi Lime play.
In addition, Kinder Morgan Energy Partners LP and Martin Midstream Partners LP are also planning a new joint venture, to be dubbed Pecos Valley Producer Services LLC. The joint venture will be created to help develop a multi-commodity rail terminal in Pecos, Texas, to aide growing operations in the Permian Basin. The facility will be constructed and operated by a subsidiary of Watco Co. Inc., which is one of the largest privately held short-line railroad companies in the U.S.
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Kinder Morgan and Martin Midstream Partners will offer immediate natural gas liquids storage, take-away and fractionation services, and are actively seeking to develop natural gas and crude gathering and processing systems within the area. Once the terminal has been fully developed, it will encompass about 85 acres and will be able to support unit trains.
Elsewhere, Inergy Midstream LP, a subsidiary of Inergy LP revealed plans to jointly market and develop a new billion dollar interstate natural gas pipeline, known as the Commonwealth Pipeline, with affiliates of UGI Corp. and WGL Holdings Inc. The proposed 200-mile pipeline is expected to transport at least 800,000 dekatherms per day of natural gas when it is placed into service sometime in 2015. Affiliates of UGI and WGL are expected to execute precedent agreements to become anchor shippers on the new pipeline.
Rather than target traditional markets in the Northeast like New York, the companies are planning to send the gas to the Mid-Atlantic region, converging with service markets such as Philadelphia, Baltimore and Washington D.C. The pipeline will extend from the southern terminus of Inergy Midstream's MARC I pipeline in Lycoming County, Pennsylvania, through UGI's utility service areas in central and eastern Pennsylvania to a point of interconnection with WGL's gas distribution system near Rockville, Maryland.
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