Dominion and Caiman Energy II LLC on Thursday said they are forming Blue Racer Midstream LLC, a $1.5 billion joint venture (JV) that would provide midstream services to natural gas producers operating in the Utica Shale in Ohio and portions of Pennsylvania.
Blue Racer would be an equal partnership of Dominion and Caiman Energy II, with Dominion providing midstream properties and Caiman throwing in private equity capital. Williams Partners LP bought Caiman Energy’s midstream business earlier this year and formed Caiman Energy II with investors EnCap Flatrock Midstream and Highstar Capital (see Daily GPI, March 21).
“Because the portion of the Utica Shale targeted today produces a rich gas stream, gathering and processing capacity must be developed so that the natural gas and valuable natural gas liquids can be separated and sold,” said Dominion CEO Thomas F. Farrell II.
Dominion facilities to be contributed to the JV include Dominion East Ohio’s existing gas gathering network, along with other portions of its gathering system as more lines are converted to rich-gas gathering operations. With investment, the JV’s gathering pipeline system could be expanded to transport “at least” 2 Bcf/d.
The JV also would include Dominion’s Natrium Extraction Plant and related facilities, which now are being built in Marshall County, WV, as well as the Dominion Transmission pipeline, which would connect Natrium to the Dominion East Ohio gathering system. Natrium initially is to process 200 MMcf/d and fractionate 36,000 b/d of liquids; it would be expandable to serve market needs.
Williams Partners, with a 47.5% interest in Caiman, plans over the next two years to contribute $380 million. EnCap, with a 35.6% stake, is set to provide up to $285 million, while Highstar, which holds a 11.5% stake, is contributing up to $95 million. Management owns the remaining 4%.
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