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Williams Joins Northern Utica NatGas Processing Partnership

Pennant Midstream LLC, which provides natural gas gathering and processing services in the Utica Shale's northern tier, said Monday that a Williams Partners LP affiliate has acquired a 5% ownership interest in the facilities it owns.

Williams affiliate Three Rivers Midstream LLC joins the Columbia Pipeline Group Inc. (CPGX) and Hilcorp Energy Co. subsidiary Harvest Pipeline Co., which had jointly owned Pennant under a 50/50 partnership. Pennant operates the 200 MMcf/d Hickory Bend Processing Plant in Northeast Ohio's Mahoning County along with associated midstream infrastructure. Located near Youngstown, OH, Hickory Bend is the only facility of its kind located so far north in the Utica.

Pennant said Three Rivers' ownership interest nearly triples acreage dedicated to Hickory Bend to 500,000 acres and adds some of the basin’s leading producers to its customer list. Under the agreement, Williams ownership could also increase to 33.33% if it invests in growth projects at the facility.

Hickory Bend was announced in 2012, and it began accepting wet and dry gas early last year (see Shale Daily, Jan. 6, 2014). Prior to Williams acquisition, the facilities primarily served Hilcorp's operations in Northeast Ohio and Western Pennsylvania. But the region also hosts Chesapeake Energy Corp., Halcon Resources Corp. and Consol Energy Inc. production, among a few others. At the time Hickory Bend began serving producers in the area, it said the facility could eventually grow to process 1 Bcf/d, which would take its investment from $400 million to $1 billion.

CPGX recently split from NiSource Inc. into a separately traded company in a move that was expected to significantly increase its investments in the Appalachian Basin (see Shale DailyMay 15). Similarly, Energy Transfer Equity LP and The Williams Companies Inc. said last week that they would enter into a $37.7 billion merger in a tie-up heavily focused on the Appalachian Basin (see Shale DailySept. 28). 

While some producers have exited the Utica's northern tier after poor results, the region still hosts productive wells and speculation persists about the area's potential for black and volatile oil production (see Shale DailyJune 27, 2014April 29, 2014). Producers have also slowly started to shift into Northwest Pennsylvania as interest has grown in the Utica's prospects there (see Shale DailyJuly 8).

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