MarkWest Energy Partners and the Energy & Minerals Group announced the development of a new, large-scale dry gas gathering system to strategically expand the parties’ leading midstream position in the Utica Shale.
The extensive system will be underpinned by a long-term, fee-based contract with Ascent Resources-Utica, a subsidiary of Ascent Resources. Ascent is one of the largest pure-play Appalachian E&P companies with about 280,000 net acres in the prolific Utica and Marcellus shale plays.
As part of the agreement, Ascent has dedicated about 100,000 gross acres in northern Belmont and Jefferson counties in Ohio. Growing dry gas production from Ascent’s acreage is expected to support the system’s initial growth. However, the new system will also gather significant dry gas volumes from other producers.
“Our system will be a critical new gathering option, and we anticipate total investment could exceed $1 billion over the next three years,” said Frank Semple, president and CEO of MarkWest.
The system will gather more than 2 Bcf/d of gas and could ultimately consist of more than 250 miles of pipeline and more than 200,000 hp of compression, Mark West said.
Initial operation is expected to begin by the year, and the system will provide numerous takeaway options including connections to the Ohio River System, a gathering trunkline project capable of delivering gas to Rockies Express Pipeline (REX), Texas Eastern Transmission through their new OPEN project, ET Rover Pipeline and other interstate pipelines.
Development of the system will occur under a new joint venture between MarkWest and EMG, which will be owned two-thirds by the Partnership and one-third by EMG.
Currently, MarkWest and EMG, together with Summit Midstream Partners, LLC, already operate one of the largest gathering systems in the Utica Shale through the parties’ Ohio Gathering Companyjoint venture. Ohio Gathering’s system consists of hundreds of miles of low- and high-pressure pipelines and numerous compression facilities throughout southeastern Ohio, including Harrison, Guernsey, Belmont, Noble and Monroe counties.