Whole Lotta Splittin’ Going On – Crosstex and UEO Condensate and C5 Takeaway from Utica

Midstream infrastructure companies are investing heavily in facilities to gather, store and transport condensate and natural gasoline range materials in the Utica. The expectation is that production of these light hydrocarbons from the wellhead and gas processing/fractionation plants will increase significantly in 2014. Today we take a deep dive into two company’s plans for condensate and natural gasoline takeaway.

This is Part 4 in our blog series covering midstream plans to capture and deliver condensate range materials to market from Utica shale production. In Part 1 we covered the expected surge in condensate, natural gas liquids (NGLs) and to a lesser extent crude oil production from the Utica shale in the next year (2014) as a result of new infrastructure coming online. Then we described condensate and crude supply infrastructure plans recently outlined by MPC/MPLX (Marathon) at the Hart Energy DUG East Conference (November 15, 2013). In Part 2 we looked at MPLX’s longer term Utica transportation strategy to provide third party shippers with options to move liquids outside the region. In Part 3 we reviewed infrastructure proposals from Unity Pipeline Company and Kinder Morgan to move condensate and natural gasoline to Western Canada from the Utica as a diluent for blending with heavy bitumen crude to enable the latter to flow in pipelines. This time we cover existing and planned infrastructure plans by Crosstex and UEO to handle condensates and natural gasoline output in the Utica.

Crosstex Energy

Crosstex Energy, L.P. is a publicly traded midstream services company that owns natural gas and oil gathering systems, gas processing and fractionation plants and truck, barge rail and pipeline transportation assets in Louisiana, Texas and the Ohio River Valley (ORV). In October 2013 Crosstex agreed to merge its midstream assets with those of Devon Energy. The Crosstex Utica assets in the ORV were acquired through the acquisition of Clearfield Energy in 2012 and include a crude and condensate gathering pipeline, a rail terminal and a barge terminal. Crosstex is investing in these facilities in anticipation of expanding condensate production in the Utica that will need to be delivered to markets outside the region,

The 17 Mb/d pipeline system runs 200 miles north to south through southern Ohio and West Virginia and has ten truck loading stations including the Black Run rail terminal and the Bells Run barge terminal on the Ohio River (see map below). Crosstex is already shipping crude and condensate out of the Utica by rail and barge as well as delivering to Marathon’s Canton, OH refinery. The company also owns six brine wells for disposal of water from hydraulic fracturing (see Tales of the Tight Sands Laterals).

Source: Crosstex Presentation and RBN Energy (Click to Enlarge)

The Black Run rail-loading terminal is located in Frazeysburg, OH, on the Ohio Central Railroad (OHCR). The terminal was reactivated in June 2013 with a 20-car rail rack that can load up to 24 Mb/d of Utica oil and condensate. The OHCR is a 70-mile short line freight railroad that connects to the Columbus and Ohio River Railroad, CSX, Norfolk Southern, Ohio Southern Railroad and Wheeling and Lake Erie Railway. Crosstex is also considering developing a second rail terminal on the CSX railroad at Eureka opposite Bells Run.

In March 2013 Crosstex entered into a joint venture, to be known as E2, with Enerven (a gas compression services company). E2 will build and operate 3 natural gas compression and condensate stabilization stations in Monroe and Noble counties in Southern Ohio (the orange triangles inside the green dotted circle on the map above). The initial installations are nearing completion and are expected to be operational by the end of 2013. The stations will have capacity to compress approximately 300 Mcf/d of natural gas and stabilize approximately 16 Mb/d of condensate. The stations are supported by a long-term, fee-based contract with Utica producer Antero Resources.

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