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Caiman Completes West Virginia Processing Plant, Plans Another

Caiman Energy has completed a 120 MMcf/d cryogenic processing plant in the Marcellus Shale in Marshall County, WV, and, prompted by drilling projections from existing and potential customers, plans to open a 200 MMcf/d facility at the same location later this year, the Dallas-based company said Wednesday.

Caiman has reached a definitive long-term agreement with Marcellus Shale heavyweight Chesapeake Energy Corp. to process rich gas produced in Marshall and adjacent Wetzel County, at the Ft. Beeler Processing Plant I near Cameron, WV, in the state's northern panhandle.

Caiman has agreements in place with AB Resources and Chief Oil & Gas, its initial anchor tenants in the Marcellus. Existing customers include Trans Energy Inc.(see Daily GPI, Dec. 1, 2009) and Republic Energy. Recent midstream service agreements with long-term acreage dedications include contracts with Gastar Exploration Ltd., Stone Energy, Grenadier Energy Partners and Drilling Appalachian Corp., Caiman said. Those agreements bring Caiman's total dedicated acreage in the rich gas Marcellus processing area of Marshall and Wetzel counties to more than 160,000 acres. Including dedications in the lean gas areas of Pennsylvania and West Virginia, Caiman now has almost 500,000 acres of Marcellus acreage dedicated to its midstream operations.

The 200 MMcf/d Ft. Beeler Processing Plant II is expected to be complete by the end of 2011, according to Caiman, which said it will also explore construction of a third cryogenic processing facility with capacity of 200 MMcf/d as early as the second quarter of 2011. Caiman has more than 60 miles of high-pressure, large-diameter pipeline in service in the Marcellus Shale and an additional 60 miles of gas gathering lines under construction.

"We are committed to meeting the needs of our dedicated producer base," said Caiman CEO Jack Lafield. "There are 10 rigs currently running on dedicated acreage in our rich gas areas. To meet our customers' expanding requirements for infrastructure, we expect to have total processing capacity of 520 MMcf/d online by the second half of 2012."

Caiman's customers have been active in the northern West Virginia in recent months. Earlier this month St. Marys, WV-based Trans Energy began drilling its seventh horizontal Marcellus Shale well in Marshall County (see Shale Daily, Jan. 20). Chief has drilled and completed wells in Marshall County, as well as in nine Pennsylvania counties (see Shale Daily, Nov. 12, 2010), and Gastar last year began drilling its first operated horizontal Marcellus Shale test, the Wengerd No. 1 in Marshall County (see Shale Daily, Nov. 11, 2010). Gastar also said it planned to buy 59,000 West Virginia acres, concentrated in Preston, Tucker and Pendleton counties, southeast of the Ft. Beeler facility.

Caiman expects to invest more than $400 million for new infrastructure in the Marcellus Shale by the end of this year, Lafield said.

"Marshall and Wetzel counties in West Virginia are home to some of the best rich gas resources in the entire play. We will continue to develop and grow our assets as drilling activity expands, driving increased requirements for gathering, processing, and access to high value markets," he said.

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