Williams, Atlas launch Marcellus shale line JV

Christopher E. Smith
OGJ Pipeline Editor

HOUSTON, Apr. 2 -- Williams has formed a Marcellus shale midstream natural gas joint venture with Atlas Pipeline Partners LP. The venture will own Atlas's Appalachian basin gathering system, with Williams owning 51% of the JV and operating the system.

The gathering system includes 1,800 miles of intrastate gathering lines servicing 6,900 wells. Average throughput exceeds 100 MMcfd, a 30% increase over the past year.

The JV's anchor customer will be Atlas Energy Resources, which holds more than 550,000 acres in the Marcellus, including 274,000 in the high-potential southwest Pennsylvania area. Atlas Energy estimates 4-6 tcf equivalent resource potential on its holdings, with 4,000-6,000 potential drilling locations at 40-acre spacing.

In addition to Atlas' resources, Williams sees the general throughput potential of the Appalachian basin as adding future gathering opportunities.

Williams is also building a 450-MMcfd processing plant in western Colorado's Piceance basin, where the company has most of its gas production, reserves, and development activity, with start-up scheduled for third-quarter 2009 (OGJ, Jan. 5, 2009, p. 20). The Marcellus JV will allow Williams greater flexibility in moving supplies east. Williams's Rockies Connector project, a proposed expansion of the Transco system, is designed to connect gas from the Appalachian and Rockies supply regions to the East Coast.

Williams will contribute $102 million and issue a $25.5 million note payable to the JV, Laurel Mountain Midstream LLC, in exchange for its 51% share in the venture.

Contact Christopher E. Smith at chriss@ogjonline.com.

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