Dominion to build major gas processing, liquids separation plant to support Marcellus, Utica Shale production

Source: Dominion

Dominion (NYSE: D) is proceeding with its next major project in the Marcellus and Utica Shale regions, the construction of a large natural gas processing and fractionation plant along the Ohio River in Natrium, West Virginia.

The first phase of construction includes facilities that can process 200 million cubic feet of natural gas per day and fractionate 36,000 barrels of natural gas liquids per day. This phase of the project is more than 90 percent contracted and is expected to be in service by December 2012.

"We are working to secure additional producer commitments for a second phase of the project," said Thomas F. Farrell II, chairman, president and chief executive officer of Dominion. "Once those contracts are finalized, efforts to expand the Natrium facility to process a total of 400 million cubic feet of natural gas per day and fractionate 59,000 barrels of natural gas liquids per day will be under way."

The new facility is a response to the need for additional processing and fractionation capacity in the region. The rising price of oil and the low price of natural gas have shifted drilling activity in the region from the dry gas to the wet gas areas as producers look to capture the economic value of natural gas liquids.

"The Natrium site is an ideal location," said Gary Sypolt, chief executive officer of Dominion Energy. "We will have the capability to access production in both the Marcellus and Utica Shale regions, and ship products via barge, rail, truck and pipe, thus offering significant value to producers."

Dominion has exercised its option with PPG Industries to purchase land and locate the new plant adjacent to PPG's Natrium facility in Marshall County, about 9 miles north of New Martinsville, W.Va. It will connect to Dominion Transmission's TL-404 pipeline, an existing pipeline in Ohio and West Virginia that was recently converted to handle wet gas.

Wet gas from West Virginia and Ohio will be delivered to the TL-404 by Dominion Transmission, Dominion's interstate natural gas pipeline and storage subsidiary, and by Dominion East Ohio, Dominion's natural gas distribution subsidiary in Ohio.

"The emerging Utica Shale play will also have access to Natrium's services through the large diameter, high pressure pipelines of Dominion East Ohio that are already connected to TL-404," said Anne Bomar, senior vice president and general manager of Dominion East Ohio.

Besides bringing new development to the area, the site is expected to employ 40-50 people when fully completed. It will encourage local natural gas production by allowing producers to get their products, both liquids and dry gas, processed and separated for marketing.

The largest customer is Chesapeake Energy Marketing, Inc., a wholly-owned subsidiary of Chesapeake Energy Corporation (NYSE:CHK), which has contracted for 100 million cubic feet per day and has an option for capacity on the second phase. Dominion has retained CB&I to be the engineering, procurement and construction contractor for the first phase.

Dominion's existing processing and liquids separation facility, the Hastings Extraction Plant in Pine Grove, W.Va., has been the site of pioneering in the natural gas industry. The first compressor station was constructed there in 1902. In 1913 it became the site of the first oil absorption processing plant in the U.S., separating natural gasoline from the natural gas stream. Today Hastings is a leading Appalachian basin supplier of propane, butane, iso-butane and natural gasoline.

Dominion Transmission provides natural gas gathering, processing, transportation and storage services, operating in the heart of the Marcellus Shale production area. Dominion East Ohio which provides natural gas distribution, transportation and storage services in northeastern and western Ohio, is the largest gatherer of natural gas in Ohio, and is located in the heart of the wet Utica Shale play.

Both are subsidiaries of Dominion, one of the nation's largest producers and transporters of energy, with a portfolio of approximately 28,200 megawatts of generation, 11,000 miles of natural gas transmission, gathering and storage pipeline and 6,300 miles of electric transmission lines. Dominion operates the nation's largest natural gas storage system with 947 billion cubic feet of storage capacity and serves retail energy customers in 15 states.



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