MarkWest Energy Partners LP and NGP Midstream & Resources LP (M&R) are joining forces to jointly construct and operate natural gas midstream services in the Marcellus Shale. Under terms of the joint venture agreement, to be owned 60% by MarkWest and 40% by M&R, MarkWest would contribute $100 million of its Marcellus shale assets and operate the facilities. M&R would invest $200 million, which would be used to fund the project this year. Capital funding for 2010 and 2011 would be driven by producer drilling programs. To achieve the 60/40 capital structure, MarkWest would invest another $200 million in incremental capital by the end of 2011. MarkWest and M&R expect the joint venture to be capable of processing up to 240 MMcf/d for Range and other producers by the end of this year.
Energy Transfer Partners LP (ETP) and a subsidiary of Chesapeake Energy Corp. are partnering to construct a 178-mile, 42-inch diameter pipe that would connect emerging Haynesville Shale natural gas production to Louisiana’s interstate pipeline network. According to Dallas-based ETP and Chesapeake Energy Marketing Inc., the proposed Tiger Pipeline would have an initial throughput capacity of at least 1.25 Bcf/d and would connect to ETP’s dual 42-inch diameter pipe system near Carthage, TX. From Carthage, the pipe would extend through the heart of the Haynesville Shale in northwestern Louisiana to Delphi, LA. There, gas supplies could interconnect with “at least” seven interstate pipes, the companies said. Chesapeake, which is one of the largest leaseholders in the play, committed to a 15-year agreement with ETP for around 1 Bcf/d of firm transportation capacity. Based on the results of an open season, the pipeline’s initial throughput capacity could be increased up to 2 Bcf/d, ETP noted. The pipeline project is expected to cost $1-1.2 billion to construct, depending upon the final throughput capacity design, with costs to be incurred over a three-year period. Pending regulatory approvals, the pipe could be in service by mid-2011.
Citing increasing infrastructure, environmental and legal costs, Spokane, WA-based Avista Utilities Jan. 23 filed for retail natural gas and electric rate increases collectively totaling about $109 million in Washington state and Idaho. The utility seeks to have increases in Idaho effective by late August, and the rate hikes in Washington effective at the end of this year. The Idaho Public Utilities Commission (PUC) has a seven-month processing procedure for rate increase requests; and the Washington Utilities and Transportation Commission (WUTC) uses an 11-month process. Other rate changes expected later in the year in both states include annual purchased gas adjustments typically filed each September, and an expected settlement with the Bonneville Power Administration (BPA) on its residential exchange program that would result in electric rate credits for Avista’s residential and small farm customers. Included in the PUC and WUTC filings are costs for generating and purchasing power, and those costs have increased during the last year due in part to what Avista called “the need to replace expiring low-cost power contracts,” and the continuing need to acquire new resources to serve growing customer demand.
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