MarkWest Energy Partners LP (NYSE: MWE) and the Energy & Minerals Group (EMG) have developed a new, large-scale dry gas gathering system to expand the parties’ midstream position in the Utica shale play. The system will be underpinned by a long-term, fee-based contract with Ascent Resources – Utica LLC, a subsidiary of Ascent Resources LLC.
Ascent is one of the largest pure-play Appalachian exploration and production (E&P) companies, with approximately 280,000 net acres in the prolific Utica and Marcellus shale plays. As part of the agreement, Ascent has dedicated to the parties approximately 100,000 gross acres in northern Belmont and Jefferson counties, 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.
The system will be designed to gather more than 2 billion cubic feet per day (bcf/d) of gas from this highly prospective portion of the Utica’s dry gas window, and could ultimately consist of more than 250 miles of pipeline and more than 200,000 horsepower of compression. Initial operation is expected to begin by the end of 2015, 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.
MarkWest and EMG, together with Summit Midstream Partners LLC, operate a gathering system in the Utica shale play through the parties’ Ohio Gathering Co. LLC joint 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.