Midstream natural gas processing services offered by MarkWest Liberty Midstream & Resources LLC in northwestern West Virginia continue to expand after the operator on Wednesday secured long-term agreements with pipeline subsidiaries of Magnum Hunter Resources Corp.

Magnum Hunter’s Eureka Hunter Pipeline LLC and Triad Hunter LLC completed agreements with MarkWest Liberty, which is a partnership of MarkWest Energy Partners LP and The Energy and Minerals Group. The agreements provide for long-term natural gas liquids (NGL) processing services for Marcellus Shale production gathered through the Eureka Hunter Pipeline System, including equity production for Triad and other third-party producers.

“Due to the very high Btu nature of the natural gas stream produced from the Marcellus Shale in northwestern West Virginia, it has been a priority for Eureka Hunter to not only be able to offer gathering services, but to also offer processing such that the extremely valuable NGLs within this production stream can be captured and then sold on a stand-alone basis in order to realize full economic value,” said Don Kirkendall, senior vice president of Eureka Hunter Pipeline.

Under one agreement Eureka Hunter sold its under-construction Thomas Russell cryogenic gas processing plant to MarkWest Liberty for an undisclosed amount. The plant would be renamed Mobley 2 and installed adjacent to MarkWest Liberty’s nearly completed Mobley 1 plant. Mobley 2 is to have 200 MMcfe/d of gas processing capacity. Mobley 1, with 120 MMcfe/d of capacity, is slated to begin commercial operations in 2Q2012 while Mobley 2 is expected to be in service a few months later.

The completion of both Mobley plants would increase MarkWest Liberty’s total gas processing capacity by 320 MMcfe/d, the operator said. In addition to gas liquids handling services, MarkWest Liberty would provide fractionation services at its Houston, PA, processing and fractionation complex.

Eureka Hunter also agreed to extend its 20-inch diameter gas gathering system to the Mobley processing complex by May 1, 2012 to allow unprocessed NGLs to be delivered to both Mobley plants. Eureka Hunter would be gathering both Triad’s and other gas production for delivery. Initial delivery volumes from Eureka Hunter to the Mobley complex are currently estimated to be in the 50,000 MMBtu/d to 75,000 MMBtu/d. range.

“Adding Mobley processing as another delivery option for producers connected to Eureka Hunter expands the optionality that makes Eureka Hunter so unique in this region,” said Kirkendall. Selling the Thomas Russell plant “further enhances our liquidity position and allows our expansion activities to accelerate. Eureka Hunter’s sister company, Triad Hunter, will benefit from having a pipeline ready to move its rapidly increasing raw Marcellus Shale production to sales and now processing. The ability of Triad Hunter to book additional NGL proven reserves is also now significantly enhanced.”

Based on current pricing for NGLs, Eureka Hunter and other third-party producers said they anticipate a “pricing uplift” of $1.00-1.25/Mcfe sold, net of gathering and processing charges. Additionally, gas production processed at the Mobley complex would be able to access both the Columbia Gas Transmission and Equitrans interstate pipeline systems, they noted.

Eureka Hunter and MarkWest Liberty also signed a mutual cooperation agreement to jointly develop “critical” gas-related services “to support Marcellus Shale producers in a significant portion of northwest West Virginia.”

MarkWest Liberty’s growth in West Virginia has been on the march for months. In September Equitrans LP received the go-ahead from the Federal Energy Regulatory Commission to construct a pipeline in Pennsylvania and West Virginia, which would tie in with the Mobley complex and several pipeline systems (see Shale Daily, Sept. 23).

Also last month Project Mariner West, a proposed Marcellus-to-Canada pipeline designed to deliver ethane from MarkWest Liberty’s Houston, PA, complex to Sarnia, ON, said it had received binding commitments enabling it to proceed with an initial capacity to transport 50,000 b/d and the ability to expand to support higher volumes as needed (see Shale Daily, Sept. 8; March 24).