Crestwood Midstream Partners LP signed a memorandum of understanding with Mountaineer Keystone LLC (MK) to build a 42-mile, 16-in. OD Tygart Valley Pipeline natural gas gathering system, serving MK’s Marcellus shale development program in Northeast West Virginia.
MK, based in Pittsburgh, Pa., plans to commence its horizontal drilling program in Barbour, Preston, and Taylor Counties, W Va., in mid 2012.
Crestwood expects to complete TVP by fourth-quarter 2012, interconnecting with Columbia Gas Transmission’s WB Pipeline in Randolph County, W Va. Crestwood estimates the TVP project will cost $70 million.
TVP initially will transport 200 MMcfd, expandable to 300 MMcfd with compression. MK expects to reserve firm capacity of 115 MMcfd as anchor shipper under a long-term, fixed-fee gathering agreement.
Crestwood is offering remaining firm capacity to area producers who have delayed or slowed drilling and development plans due to a lack of pipeline infrastructure in the area.
TVP will give MK and others access to gas markets in the Washington, DC, and Baltimore areas. MK is a First Reserve portfolio company. First Reserve also manages the fund that owns Crestwood Holdings LLC, the majority owner of Crestwood’s general partner.