A Range Resources Corp. unit has signed on as an anchor customer for a new private pipeline system that would supply fresh water to natural gas producers drilling in the Marcellus Shale in north-central Pennsylvania.

Subsidiaries of Aqua America Inc. and Penn Virginia Resource Partners LP (PVR) announced late Tuesday that they will partner on the project, a 12-inch diameter steel pipeline that is to run parallel to the trunkline of PVR's gas gathering system in Lycoming County and share PVR's existing rights-of way.

The first anchor agreement, with Range Resources-Appalachia LLC, would supply fresh water to three of Range's water impoundments. Negotiations with other area producers are under way, the companies said.

The project offers "tangible benefits to both the contracting producers and the local communities in which we operate," said PVR CEO William H. Shea Jr. "The pipeline will provide contracting producers with a more reliable fresh water source at a lower delivered cost. By reducing the number of trucks operating on area highways, area residents will benefit from reduced traffic congestion, noise and delays."

PVR would construct the fresh water pipeline and handle negotiating pipeline capacity contracts with producers. The new joint venture, Aqua-PVR Water Services LLC, would operate the system when completed and handle water intake supply arrangements.

The "Marcellus Shale offers a critical and challenging opportunity for the State of Pennsylvania," said Aqua CEO Nicholas DeBenedict. "Critical because the energy needs of the country must be developed domestically and Pennsylvania can be that provider. Challenging because it must be done in a manner that protects and manages our most precious resource, water.

"This project is the first that prudently enables the development of the Marcellus while helping to protect our watersheds and manage our supplies. Pumping water through pipe, as opposed to trucking water, reduces road traffic and damage that can result in runoff that can negatively impact streams in this sensitive part of the state. Managing the supply from confirmed reliable sources reduces the potential for over withdrawal from those same streams."

Aqua America and PVR jointly are investing about $24 million to construct the first 18-mile-long segment of the project, which is now under way. Limited water delivery is expected before the end of this year. The first segment is expected to be completed and in regular operation by early next year.

PVA owns and operates more than 4,200 miles of gas gathering pipelines and seven processing systems with 420 MMcf/d of capacity. Most of the businesses are in Oklahoma, Pennsylvania and Texas. Publicly held Aqua America serves almost three million residents in Pennsylvania, Ohio, Illinois, Texas, New Jersey, Indiana, Virginia, Florida, North Carolina, Maine, New York and Georgia.