NiSource Inc. has clinched two joint ventures (JV) in the Utica Shale with Hilcorp Energy Co. to construct midstream facilities and to develop a “significant acreage block” in the Utica/Point Pleasant formation in northeast Ohio and western Pennsylvania.

NiSource officials in early May said they were in advanced talks with a potential partner in the Utica (see Shale Daily, May 2).

“This is a tangible example of the various upstream and midstream growth options available to NiSource across the shale energy region,” said CEO Robert C. Skaggs Jr. “We will continue to build our inventory of growth and investment projects as development and delineation of the shale play unfolds.”

In the upstream JV, NiSource Gas Transmission & Storage (NGT&S) unit Midstream & Minerals Group LLC would combine its leasehold acreage in northeast Ohio with Houston-based Hilcorp’s to form a block in the Utica/Point Pleasant Shale formation in northeastern Ohio and western Pennsylvania. Hilcorp would operate and manage the combined acreage; NiSource would be a nonoperating working interest owner.

The newly formed midstream JV, the partners’ Pennant Midstream LLC initially involves building 50 miles of wet gas gathering pipeline facilities in northeastern Ohio and western Pennsylvania with 400 MMcf/d of capacity. In addition, a natural gas processing complex with 200 Mcf/d of cryogenic gas processing capacity and an associated residue line in Ohio would process gas for the upstream JV and other interested parties.

The processing plant is scheduled to be delivered later this month. The gathering system and processing complex, to be operated by NiSource Midstream Services, is slated for service by the second half of 2013. The Pennant partners also are reviewing several options with various parties for fractionation, including developing a facility. About $300 million is budgeted this year for Pennant.

“This partnership demonstrates that NiSource is well-positioned and committed to providing the midstream services required by producers across the liquids-rich eastern Ohio and western Pennsylvania Utica Shale play,” said NGT&S Group CEO Jimmy D. Staton. “We continue to evaluate a variety of options focused on leveraging our additional acreage holdings and asset position in the Utica Shale, and we expect the timing of future projects to correspond generally to the producer activity in those areas.”

Engineering and construction plans already are in progress, and community outreach is to begin immediately, according to NiSource officials. The Hilcorp and NiSource management teams said they would work with individual surface rights owners and community officials regarding the production process and timing, as well as lease specifics.

Chesapeake Energy has by far the largest leasehold in Ohio’s Utica, with 1,214,500 net acres in the play, according to company records. EnerVest (760,000 acres), Chevron (600,000 acres) and Anadarko Petroleum (240,000 acres) also have significant holdings in the Utica.