MarkWest Energy Partners LP is working to reduce the basis differential for Marcellus/Utica producers as the midstream company prepares to scale back its capital budget for 2016 in anticipation of a bearish commodity price environment.

MarkWest’s 2016 capital expenditures (capex) are projected at $900 million to $1.5 billion, CEO Frank Semple told investors during the company’s third quarter earnings call Tuesday.

“Most of the capex…is being spent in the Marcellus and Utica, so we’ve had to temper our capex going into 2016,” Semple said.

In MarkWest’s Marcellus segment, the company averaged 77% capacity utilization in 3Q2015, down from 90% in 2Q2015, with the decrease coinciding with the addition of 600 MMcf/d capacity since June. Capacity utilization for its Utica segment fell to 70% for 3Q2015 from 77% in 2Q2015, with 400 MMcf/d of additional capacity installed since June.

“We’re going to grow into that capacity as the volumes continue to ramp up in the Marcellus/Utica,” Semple said. “We’d like to be in that 90%-plus utilization range, and so the issue around the capex in 2016 is really ensuring that we are completing our future projects, our future gas plants in particular, and fractionation facilities, based on the volume ramp-up by producers.”

Semple said the $600 million swing in MarkWest’s capital budget range for 2016 reflects variables surrounding commodity prices, the timing for additional takeaway capacity and the impact these market conditions may have on producers’ capital budgets.

“The issue in the Northeast, where the majority of our capital’s being spent…is the netbacks to our producers based on the markets they’re able to access for their gas and their natural gas liquids [NGL], their purity products, which we are, for the majority of the volume being processed and fractionated in the Northeast, we are responsible for marketing the liquids in the Northeast for our producer customers, so netbacks are very much impacted by the ability to continue to debottleneck Northeast NGLs,” he said.

Alluding to the merger with Marathon Petroleum Corp.’s master limited partnership (MLP) MPLX LP and how this may position the companies to further develop takeaway, Semple said MarkWest is “obviously very sensitive to how we can impact…that basis differential and are working on a number of projects.”

He said the “economics are so compelling in the Marcellus/Utica for rich gas development that what we need to do is…continue working with our producer customers and other sponsors of pipeline and logistics projects to ensure that the purity products are trading closer to [Mont] Belvieu. If we were trading overall in 2016 at a Belvieu minus transportation that’s more in line with historical basis differentials, then dry gas would be much less of a factor in the producers’ capital programs.”

As for the company’s Southwest segment, Semple updated investors on a recent 80 MMcf/d expansion to the Carthage IV plant, bringing total capacity in East Texas to 600 MMcf/d. The company is also continuing development in the Cana-Woodford Shale, recently signing a crude oil gathering agreement with Newfield Exploration Co. MarkWest also plans to begin operations at its Hidalgo plant in the Permian Basin beginning 2Q2016. Capacity utilization in the Southwest improved from 82% in 2Q2015 to 84% in 3Q2015.

MarkWest recorded total gas volumes of 5.8 Bcf/d for the third quarter, up 28% from the year-ago period. The company processed 2.8 Bcf/d of natural gas from the Marcellus in the third quarter, up from 2.2 Bcf/d in 3Q2014. In the Utica, MarkWest processed 928.7 MMcf/d in 3Q2015, a dramatic jump from the 459.8 MMcf/d in the year-ago period.

Total processing capacity utilization averaged around 75% in the quarter with an 18% capacity increase since June.

The company reported $49.2 million in net income for 3Q2015 (15 cents/share), down from $77.4 million (43 cents) in the year-ago period. Realized gains on hedging were $11.8 million, versus a year-ago loss of $900,000. Capital spending totaled $422.7 million in the period.