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Marathon Petroleum Holding Firm on Utica-Driven Cornerstone NGL Pipeline

An engineer with Marathon Petroleum Corp. (MPC) said that despite ongoing low commodity prices, the company is committed to building a pipeline system to transport natural gas liquids (NGL) from wells targeting the Utica Shale to its refinery in Canton, OH.

Senior engineer Jason Stechshulte said the Findlay, OH-based company's strategy is to "build some new pipelines, and then utilize some existing pipelines, where we'll add additional horsepower, so we [can] move more product through those pipelines and really offer additional opportunities for Utica producers to get to various markets."

Stechshulte, in an interview with Kent State University's WKSU-FM that was published online Wednesday, said MPC has "a trucking fleet in the Utica Shale that hauls condensate on a daily basis. We have a truck to barge facility over in Wellsville, OH, to offer the ability to get on the river. So, Marathon is very invested in the Utica and will continue to make investments in the Utica Shale."

An integral part of MPC's commitment to the Utica is the 50-mile, $250 million Cornerstone Pipeline system (see Shale DailyDec. 5, 2013), which is being built by MPLX LP, MPC’s master limited partnership. The system is to begin as a 16-inch diameter pipeline capable of transporting 180 million b/d of condensate and natural gasoline from Cadiz, OH, in Harrison County, to a tank farm in East Sparta, OH, in southern Stark County.

From East Sparta, Cornerstone would continue as an 8-inch diameter pipeline with 45 million b/d of capacity to MPC's refinery in Canton, OH. The facility currently receives NGLs from the Utica via trucks.

Construction of Cornerstone is expected to begin in May. MPC spokesman Sid Barth told NGI’s Shale Daily on Wednesday that tree clearing for the pipeline was completed at the end of March.

Last February, MPLX President Donald Templin said the partnership expects to place Cornerstone into service by the end of 2016. The pipeline would traverse Ohio's Carroll, Harrison, Stark and Tuscarawas counties. MPLX held a binding open season for the pipeline last year between February and April.

Additional infrastructure, called the Utica Build-Out Projects, is to include constructing pipelines and using existing systems to transport NGLs from the East Sparta tank farm to other markets, including refineries in the Midwest, Chicago and Western Canada. The estimated in-service date for the Utica Build-Out Projects is mid-2017.

Meanwhile, MPC said it has completed the drop-down of its inland marine business to MPLX, in an equity deal valued at $600 million (see Shale Daily,Feb. 5).

MPC announced last week that it has completed the drop down, effective March 31. In exchange, MPLX issued equity to MPC valued at $600 million ($26.09/unit), with 98% of the equity in the form of common units and the remainder in general partner units. MPC agreed to waive 1Q2016 common unit distributions, incentive distribution rights and general partner distributions, with respect to the common units issued in the transaction.

The inland marine business includes 18 tow boats and 205 barges. The fleet transports light petroleum products, heavy oils, crude oil, renewable fuels, chemicals and feedstock in the Midwest and Gulf Coast regions. The business accounted for nearly 60% of the total volumes MPC shipped by inland marine vessels.

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