UGI Corp. has entered into agreements with Tenaska Resources LLC to jointly develop gas resources in the Marcellus Shale region in north-central Pennsylvania.
UGI Energy Services Inc. will construct and operate 20 miles of gathering pipelines and related gas processing and compression facilities for wells that Tenaska intends to drill in Potter County, PA with the first phase of construction targeted for late 2013 or early 2014. The initial investment in the proposed gas gathering system is estimated at up to $25 million, with the total investment in gathering for full development of Tenaska’s Potter County acreage estimated to be in the range of $65 million over 10 years.
In addition to the gathering opportunity, UGI has invested $25 million for a 19% non-operating working interest in acreage that Tenaska operates near Mainesburg in Tioga County, PA. Both projects are located in proximity to UGI’s midstream and distribution assets, including 14.7 Bcf of natural gas storage.