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MarkWest Expanding Keystone Complex in Western Pennsylvania

MarkWest Energy Partners LP said Tuesday that it will once again expand processing and fractionation capacity at its Keystone complex in western Pennsylvania, primarily in support of Rex Energy Corp.'s growing operations there.

Markwest acquired the Sarsen and Bluestone facilities, located in Evans City, about 30 miles north of Pittsburgh, in 2012 from Keystone Midstream Services LLC for $512 million (see Shale Daily, May 9, 2012). At the time, the partnership said it would expand the existing 90 MMcf/d of processing to meet forecasted production. It brought online 120 MMcf/d of additional cryogenic capacity in May with the commissioning of the Bluestone II plant (see Shale Daily, June 2).

That expansion was dedicated almost entirely to growing production from Rex Energy's core Butler Operated area, which has since grown from a $120 million deal announced earlier this month with Royal Dutch Shell plc to acquire 207,000 net acres in western Pennsylvania and northeast Ohio (see Shale Daily, Aug. 13, 2014).

MarkWest said Tuesday that it had reached an agreement with Rex Energy and privately-held EdgeMarc Energy to construct the Bluestone III and Bluestone IV processing facilities by 4Q2015 and 2Q2016, respectively. Each of those plants will be capable of processing 200 MMcf/d. MarkWest also said its expansion plans call for an additional 40,000 b/d of de-ethanization capacity and more than 20,000 b/d of fractionation.

Rex has been reporting since 2H2013 steady gains from its liquids-rich Butler Operated area, where it continues to test downspacing and other optimization techniques at its wells (see Shale Daily, Nov. 11, 2013). CEO Tom Stabley said additional processing capacity will be needed in the area as a result of the 50,000 net acres the company acquired there as part of the deal with Shell. The latest expansion, along with Keystone's efficiency and incremental processing secured through the unused capacity of other operators in the area, will give Rex 405 MMcf/d of total processing capacity.

Rex Energy produced 128.8 MMcfe/d last quarter, a 50% increase from the year-ago period (see Shale Daily, Aug. 7, 2014), thanks in large part to its Butler Operated area and the Bluestone II expansion (see Shale Daily, July 7). MarkWest CEO Frank Semple said the partnership's Bluestone III and IV expansions are "very strategic to producer activity" in Beaver and Butler counties, among others. The agreement with EdgeMarc will be the partnership's first as well.

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