Join Together With Demand— Five Marcellus/Utica Midstream Players

MarkWest Energy Partners is clearly the big dog in the Marcellus/Utica, with by far the largest gas processing and fractionation capacity there. But several other significant players in the region--Blue Racer Midstream, Utica East Ohio Midstream, Williams Partners and Pennant Midstream among them—have also been developing the region’s midstream infrastructure, enabling producers to ramp up their output of natural gas and NGLs.  Today we continue our review of NGL-related assets in the Upper Ohio River Valley with a look at five additional midstream companies in the hunt.

Producer interest in the Marcellus in southwestern Pennsylvania and northern West Virginia and in the Utica in eastern Ohio has been rising quickly since 2011--and it’s expected to continue as more take-away capacity for natural gas and NGL comes online, offering producers access to markets as far away as Texas. In our series on the region’s NGL-related infrastructure, we’ve describe the region’s history and hydrocarbon potential generally (see Episode 1) and in more detail (Episode 2). Next, (in Episode 3) we discussed the eight major pipelines that move natural gas through and out of the region; considered the gas processing and fractionation assets of MarkWest (Episode 4 and Episode 5); and described the pipeline interconnections between MarkWest’s eight (and soon nine) gas/NGL complexes in the region—and then explained how the elements of MarkWest’s “machine” are designed to function efficiently, even in the event of NGL-takeaway disruptions (Episode 6). In our last blog in this series, we started our look at other providers of midstream services in the Marcellus/Utica by considering the assets of Blue Racer, a joint venture of Caiman Energy II and Dominion (Episode 7). This time, we look at the remaining players in the region and list their gas processing plants, fractionators, and NGL pipelines that link those facilities to the outside world.

As with the other episodes in this blog series, our discussion gets a big assist from RBN Energy’s new Pipeline GIS mapping function, which allows users to zero in on specific assets or groups of assets, and to add in (or take out) layers of assets—all with the idea of helping to understand how the region’s midstream assets fit together.

Utica East Ohio Midstream

Utica East Ohio Midstream (UEO) is a joint venture of three companies, with Access Midstream (a spinoff of Chesapeake Energy that is now owned by Williams Partners) holding a 49% ownership interest, M3 Midstream owning 30%, and EV Energy Partners (a publicly traded MLP of which producer EnerVest is the controlling member of its general partner) owning 21%. (In early April 2015, a deal was struck to have Williams Partners acquire EV Energy Partners’ stake for $575 million; the deal, which will increase Williams Partners’ stake in UEO to 70%, is expected to close in July 2015.)

Since 2013, UEO has developed the midstream asset base shown in the northwestern part of Figure #1.  You can click through to the Pipeline GIS map to see these assets in detail.  UEO has two gas processing plants—at Kensington in Columbiana County, and more recently at Leesville in Carroll County (blue dots).  The company also has a C2+ fractionation complex in Harrison County (orange dot).

Figure #1 UEO and Williams Marcellus/Utica Facilities (click to open in Pipeline GIS)

The gas processing plants have a combined capacity of 800 MMcf/d. The first 200 MMcf/d of capacity came online at Kensington in May 2013, and expansions at Kensington increased its capacity to 600 MMcf/d by the end of 2014; Leesville’s first 200 MMcf/d of capacity came online in December 2014, and UEO plans to double Leesville’s capacity to 400 MMcf/d in 2016. (As of early 2015, UEO is processing an average of about 700 MMcf/d, and through-put volumes are on the rise.)

The Kensington and Leesville gas processing plants are connected to UEO’s Harrison fractionation complex by pipelines that carry mixed or “Y-grade” NGLs (purple lines). Harrison started out (in mid-2013) with 45 Mb/d of C2+ fractionation capacity, meaning it separates Y-grade into ethane (C2) and heavier NGLs (propane, normal butane, isobutane and natural gasoline). In late 2014 Harrison’s C2+ capacity was expanded to 135 Mb/d; Harrison also has about 600 MBbl of NGL storage capacity (a lot for the Marcellus/Utica) and UEO plans to add 350 MBbl more storage capacity there by the end of 2015. In addition, Harrison has a pipeline connection to Enterprise Products Partners’ (EPD) Appalachia-to-Texas Express (ATEX) ethane pipeline, and an NGL rail-loading facility.

UEO has processing and fractionation dedications from several Utica producers, including Chesapeake, Total Gas & Power North America, EnerVest and American Energy-Utica.

Williams Partners/Access Midstream

In addition to its 49% stake in UEO (thanks to its February 2015 merger with Access Midstream), Williams Partners owns 100% of Appalachian Midstream, which operates (and owns between one-third and two-thirds of) 11 natural gas gathering systems in the Marcellus—some in the dry-gas part of the Marcellus in northeastern Pennsylvania and some in the wet-gas part in southwestern Pennsylvania and northern West Virginia. Appalachian Midstream also owns the gas processing plants and pipelines shown in the southeastern part of Figure #1.  The company’s 700 MMcf/d of gas processing capacity is split between two sites in Marshall County, WV--500 MMcf/d at Fort Beeler and 200 MMcf/d at Oak Grove—that together can produce up to 87 Mb/d of mixed, y-grade NGLs (blue dots). Its fractionation assets include a 40 Mb/d de-ethanizer at Oak Grove (green dot); the residual mixed NGLs then is fractionated at Williams’ 42 Mb/d C3+ fractionator at Moundsville—also in Marshall County (orange dot). Ethane separated out at Oak Grove is delivered to market via Williams’ 50-mile, 12-inch-diameter Ohio Valley Ethane Pipeline (OEVP, green line) from Oak Grove to MarkWest’s NGL hub at Houston, PA (shown in black since it is not owned by UEO). From there, ethane can flow into Mariner East, Mariner West and/or ATEX.

We should note that Williams Partners holds a 58% stake in Caiman II, which owns half of Blue Racer. In Episode 7 we covered how Blue Racer moves ethane from its Natrium complex to Oak Grove via a 15-mile (Blue Racer-owned) ethane-only pipeline, and that from there the ethane moves to Houston (PA) via Williams’ OEVP.

Columbia Midstream Group/Pennant Midstream

Columbia Midstream Group (CMG) is a subsidiary of Columbia Gas Transmission (itself a unit of NiSource) formed to develop the infrastructure needed to gather and process wet gas in the Marcellus/Utica. CMG also holds significant mineral acreage in the region, but does not see itself as a producer or operator; instead it pursues partnerships with producers/operators. CMG’s midstream assets to date fall into two categories: gathering systems (Majorsville, Big Pine and East Washington) that flow to gas processing plants owned by others, and a 50% stake in Pennant Midstream, a joint venture (JV) with Hilcorp Energy’s Arrowhead Pipeline subsidiary that developed and owns the Hickory Bend gathering/processing network in Mahoning County, OH.  These facilities are shown in Figure #2 (red lines).   

Note that if you click on the map it will take you to Pipeline GIS where you can turn on the layers in Figures #1 and #2 to see all the facilities referenced in this blog at the same time.