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, they said Tuesday.
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.
The Marcellus Shale continues to develop into a prolific gas shale play, as evidenced by leaseholder Range Resources Inc.’s success in the basin (see related story). MarkWest already provides midstream services in the region, and it developed gathering and processing infrastructure for Range in southwestern Pennsylvania (see Daily GPI, July 15, 2008).
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.
“M&R will be an excellent partner in our Marcellus project,” said MarkWest CEO Frank Semple. “M&R has a strong appreciation for the long-term strategic value of the Marcellus play and shares our vision of delivering best-of-class midstream services to producer customers, including our significant relationship with Range Resources. The structure of the joint venture will allow MarkWest to achieve its long-term objectives in the Marcellus while significantly reducing capital requirements over the next several years, which is a critical component of our balance sheet and liquidity objectives.”
M&R CEO John T. Raymond added that his company may explore “additional opportunities to partner” with MarkWest in the future.
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