Midstream companies this summer are in the middle of the mass expansion of pipeline infrastructure. At the center of it all stands MarkWest Energy Partners LP.
The company’s MarkWest Utica EMG LLC joint venture (JV) with The Energy & Minerals Group (EMG) is in the process of expanding MarkWest Utica’s already large-scale midstream system in the Utica shale. With a design to fully support producers’ drilling operations in the southern portion of the liquids-rich play, MarkWest Utica is constructing a cryogenic gas processing plant at its Seneca complex in Noble County, Ohio.
Following two other 200-million-cubic-feet (MMcf)-per-day processing plants that are scheduled to begin operations at the complex in the fourth quarter, the new project will bring Seneca’s total processing capacity to 600 MMcf per day by second-quarter 2014. The company expects to support rich gas production through key exploration and production players, including Seneca anchor Antero Resources.
MarkWest Utica also looks to develop its 185-MMcf-per-day Cadiz complex in Harrison County, Ohio, which began operations in mid-May. Processing capacity at the complex will increase to 325 MMcf by mid-2014. MarkWest’s JV plans to remove the system’s 60-MMcf-per-day interim refrigeration plant and replace it with the completed 200-MMcf-per-day Cadiz II cryogenic gas processing facility. Furthermore, the JV intends to connect the two expansive complexes to each other with a rich-gas header and then connect the entire system to its general partner’s Marcellus natural gas liquids (NGLs) operation in the Northeast.
The company is also constructing an extensive NGL gathering system that will interconnect to the TEPPCO and ATEX pipelines to the Mont Belvieu, Texas, NGL hub.
The JV has already executed seven different agreements, including completed definitive agreements with Gulfport, Antero and Rex Energy, to acquire more southern Utica acreage.
MarkWest Utica plans to construct 300 miles of gathering pipeline, five cryogenic facilities with almost 1 billion cubic feet per day of processing capabilities and a C2+ fractionation capacity of about 100,000 barrels per day by this time next year. Based on well results and the company’s history of plant utilization rates, MarkWest anticipates the Utica development project will achieve a 60% or better utilization within 12 months after commissioning. According to a MarkWest investor presentation, EMG will potentially fund up to the first $950 million of the JV’s capital expenditures.
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