NiSource, Hilcorp Announce Utica Shale JV

September 2012, Vol. 239 No. 9

NiSource Inc.’s Midstream & Minerals Group, LLC, announced a joint venture with affiliates of Hilcorp Energy Company to construct gathering pipeline infrastructure and NGL processing facilities to support natural gas production in the Utica Shale region of northeast Ohio and western Pennsylvania.

The first phase of the venture’s investment program, amounting to $300 million, is planned for later this year.

NiSource will participate in a separate joint venture with Hilcorp to develop the hydrocarbon potential on a significant combined acreage block in the Utica/Point Pleasant Shale formation. NiSource will participate as a non-operating working interest owner in the total acreage position. Hilcorp will serve as operator and manage the development of the combined acreage.

The newly named midstream joint venture, Pennant Midstream, LLC, will initially invest in construction of 50 miles of 20-inch gathering pipelines in northeast Ohio and western Pennsylvania. Pennant will invest in construction and installation of a cryogenic NGL processing plant in Ohio with initial capacity of 200 MMcf/d.

NiSource Midstream Services, LLC, will operate the system, which is expected to initially provide 400 MMcf/d of wet and dry gas gathering, with significant anticipated expansion opportunities based on production activity in the area. The Hilcorp/NiSource upstream joint venture will anchor the project with a long-term gathering and processing agreement while additional capacity will be marketed to other active producers in the area. The project is expected to be in service by the mid 2013. Pennant is also reviewing multiple downstream NGL options with several parties, including the development of its own fractionation facilities.

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