MarkWest Energy Partners, L.P. (NYSE: MWE) (“MarkWest” and “the Partnership”) and The Energy & Minerals Group (“EMG”) today 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, LLC, a subsidiary of Ascent Resources, LLC(“Ascent”). Ascent is one of the largest pure-play Appalachian 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 Utica Shale includes some of the most productive and economic dry gas acreage in the United States and producers are quickly capitalizing on this tremendous opportunity. We are very excited to continue our strong partnership with EMG to provide Ascent and others with a premier gathering system, located in what may well be the most economic area of the Utica dry gas play,” commented Frank Semple, Chairman, President, and Chief Executive Officer of MarkWest. “Our system will be a critical new gathering option, and we anticipate total investment could exceed $1 billion over the next three years.”
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.
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 Company, L.L.C. (“Ohio Gathering”) 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.
Over the past year, Ohio Gathering has extended its significant rich gas footprint into growing areas of dry gas development. At the end of May 2015, Ohio Gathering began initial operations of a dry gas gathering system in the northern areas of Monroe County, and the southern portion of Belmont County, Ohio. The system currently supports Gulfport Energy Corporation (NASDAQ: GPOR), and Rice Energy (NYSE: RICE). In just over two months, the dry gas system is already transporting over 150 million cubic feet per day (MMcf/d), in addition to the 600 MMcf/d of rich gas that is currently being gathered.
“This significant dry gas gathering expansion in the Utica Shale is an example of the $6 to $9 billion of additional growth opportunities that we will have an even greater ability to deliver after consummation of the announced strategic combination with MPLX,” remarked Semple. “Our expansive gathering assets, combined with over 1.3 Bcf/d of processing capacity and 160,000 barrels per day of fractionation capacity in Ohio, are well positioned to continue supporting the exceptional growth of both dry and rich gas volumes from the Nation’s fastest growing resource play.”