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Chesapeake, Partners Join Utica Midstream Buildout

Chesapeake Energy Corp., through affiliates of Chesapeake Midstream Development LP (CMD), is partnering with M3 Midstream LLC (Momentum) and EV Energy Partners LP to develop what it claimed will be the largest integrated midstream service complex in eastern Ohio to serve Utica Shale production.

The complex is to consist of natural 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 and have an initial capacity of 600 MMcf/d. NGLs would be delivered to a central NGL hub complex in Harrison County that is to feature an initial NGL storage capacity of 870,000 bbl and fractionation capacity of 90,000 b/d, as well as a rail-loading facility.

"This partnership will allow CMD to focus on building the extensive gathering and compression requirements of the system, while leveraging the expertise of Momentum to build and operate the processing and fractionation facilities," said CMD President Mike Stice. "In addition, the scope of this project will provide an economic boost for companies and residents throughout Ohio..."

Engineering and procurement has begun for the project, with the first cryogenic processing and fractionation plants scheduled to be in service by the second quarter of 2013, Chesapeake said.

The partnership plans to invest $900 million over the next five years with the majority of the capital invested in the first two. Ownership of the partnership is 59% by affiliates of CMD, 33% by Momentum and 8% by EVEP. Total E&P USA Inc., Chesapeake's 25% joint venture partner in the Utica Shale wet gas acreage, has an option to participate in the project, which may reduce the shares of CMD affiliates and EVEP to 44% and 6%, respectively.

"This investment complements EVEP's asset base in Ohio, where EnerVest has a decade of operating experience and a substantial Utica acreage position," said EVEP CEO Mark Houser.

Meanwhile, to the south in nearby Harrison County, MarkWest and The Energy & Minerals Group plan to develop gas processing and NGL fractionation, transportation and marketing infrastructure this year. The project was announced last December (see Shale Daily, March 8; Dec. 15, 2011). On Tuesday Ohio Gov. John Kasich visited Cadiz, OH, to tout the project (see Shale Daily, March 14).

DCP Midstream LLC also is considering expanding to the Utica Shale (see Shale Daily, March 8).

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