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Dominion Secures Utica Agreement, Readies Expansions

Dominion Resources Inc. has secured a long-term natural gas gathering service agreement in northeastern Ohio with M3 Ohio Gathering (Momentum) to process wet gas from the Utica Shale and is readying several projects in the Utica and Marcellus shale region to expand capacity services, CEO Tom Farrell said Thursday.

Subsidiary Dominion East Ohio agreed to provide firm gathering services for 180 MMcf/d from the Utica "in conventional wells committed to M3 Ohio," Farrell said during a conference call.

Dominion would deliver the volumes to the Kensington Processing Plant, now under construction by Utica East Ohio Midstream LLC, a joint venture of Momentum, Chesapeake Energy Corp. affiliate Chesapeake Midstream Development LP (CMD) and EV Energy Partners LP (EVEP). The Kensington plant expects to process up to 800 MMcf/d.

"The services will be provided from existing pipeline assets, with limited capital upgrades to support the project," said Farrell. "We will begin this gathering service for phases of Kensington that are slated to come online in early 2014."

CMD in March partnered with Momentum and EVEP to develop Utica East Ohio, which it claimed then would be the largest integrated midstream service complex in eastern Ohio (see NGI, March 19). Total E&P USA Inc., Chesapeake's 25% joint venture partner in the Utica Shale wet gas acreage, also was given an option to participate in the project.

The midstream complex is to consist of gas gathering and compression facilities constructed and operated by CMD, as well as processing, natural gas liquids (NGL) fractionation, loading and terminal facilities constructed and operated by Momentum. The cryogenic processing facility is to be located in Columbiana County with an initial capacity of 600 MMcf/d. NGLs would be delivered to a central NGL hub complex in Harrison County featuring an initial NGL storage capacity of 870,000 bbl, fractionation capacity of 90,000 b/d, as well as a rail-loading facility.

Dominion's Appalachian Gateway Project was placed into service on Sept. 1, on time and below budget, Farrell said (see Shale Daily, Sept. 4). The pipeline expansion is expected to "relieve congestion in the region allowing conventional natural gas production to move to market" from West Virginia and southwestern Pennsylvania to growing markets in the Mid-Atlantic and Northeast.

"Both the next -- Northeast Expansion and the Ellisburg to Craigs Projects -- are expected to be in service" in the next few days, he added. The Northeast Expansion Project would provide firm transportation from multiple locations along Dominion Transmission Inc.'s existing system to an interconnect operated by Transcontinental Gas Pipe Line at Leidy, PA (see NGI, July 4, 2011). The Ellisburg to Craigs project would move up to 150,000 Dth/d from Tennessee's 300 Line in northern Pennsylvania to its 200 Line in upstate New York (see NGI, Sept. 19, 2011).

"Development of the Utica Shale formation is proceeding, as demonstrated by the leading indicators of announced well permits and drilling activity," said Farrell. "Through early October, the Ohio Department of Natural Resources had issued 413 horizontal well permits to multiple producers with 176 wells drilled to date. Thirty-five of those wells are now producing; 24 rigs are currently on location in Ohio.

"Dominion continues to leverage our Ohio and West Virginia infrastructure in support of this rapidly growing energy supply. The construction of Natrium in Phase I is moving forward. The inlet, outlet and product lines are expected to be complete in November," Farrell said.

Dominion in early 2011 optioned land in Natrium, WV, to construct a facility to support wet gas production (see NGI, Jan. 17, 2011). It then exercised its option with PPG Industries to purchase land and locate the plant adjacent to PPG's Natrium facility in Marshall County, WV. The first phase of the facility would be able to process 200 MMcf/d and fractionate 36,000 b/d of NGLs. In July a Dominion affiliate began soliciting interest in a new ethane pipeline, which would transport from the processing plant to an interconnect with Enterprise Products Partners LP's planned Appalachia to Texas Express pipeline near Follansbee, WV.

"All major equipment, spheres and towers have been set, and piping and electrical work has been progressing well," Farrell said of the Natrium facility. "Over 900 workers are on-site, working two shifts to meet the late December in-service date."

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