ECA partners with China Shenhua Energy

Denver, Colo.-based producer Energy Corporation of America (ECA) has entered into a 50-50 partnership with a subsidiary of China Shenhua Energy Co. Ltd. in the Marcellus shale.

Under the terms of the agreement, Shenhua America Holdings Corp. and ECA will jointly develop 25 natural gas wells during the next 18 months in Greene County, Pa.

Shenhua is set to contribute an initial $90 million toward drilling costs, and additional costs will be evenly split between the two companies. ECA will serve as operator.

Shenhua's state-owned parent company is the biggest coal company in China and the largest coal distributor in the world.

John Mork, chief executive officer of ECA, said: "We are very pleased to be working with Shenhua on this joint venture, and this is only the beginning of what, I hope, will be a long, mutually-beneficial working relationship."

Greene County is at the center of ECA's Marcellus shale development program. The private company operates more than 4,600 wells and 5,000 miles of pipeline in the Appalachian basin, where it has been active for more than 45 years.

ECA is currently focused on developing its Marcellus shale acreage in Pennsylvania and West Virginia.

Enterprise nears startup of ATEX line

Enterprise Products Partners LP began injecting ethane into the Appalachia-to-Texas Express (ATEX) pipeline in November and expected full commercial service on the line to commence in January 2014.

The 1,230-mile ATEX line originates in Washington County, Pa., and connects to four fractionators in the Marcellus-Utica shale region, including MarkWest's Houston and Cadiz plants in Pennsylvania and Ohio, respectively, the Blue Racer Natrium plant in West Virginia, and the Utica East Ohio Scio plant.

ATEX will have an initial capacity of 125,000 b/d, expandable to 265,000 b/d. The project is supported by firm ship-or-pay transportation agreements with 15-year terms. About 65,000 b/d is expected to move initially, ramping up to more than 130,000 b/d in 2018.

ATEX terminates at Enterprise's Mont Belvieu, Tex., complex, which has more than 100 million bbl of NGL and petroleum liquid storage, more than 750,000 b/d of fractionation capacity, and an extensive NGL distribution system. Enterprise said once its Aegis ethane pipeline is completed, ATEX will link Marcellus-produced ethane to every ethylene production facility in the US and provide supply to crackers planned for the Gulf Coast.

Enterprise's distribution system also supplies its LPG export terminal along the Houston Ship Channel and is expected to supply a second export terminal now under development. The new terminal will load 6-6.5 million bbl/month of low-ethane propane and butane on vessels up to very large gas carrier-class in size.

Site evaluations are under way in Louisiana and Texas, and the facility has a targeted in-service date in fourth-quarter 2015.

Consol Energy closes Marcellus shale deal

Consol Energy Inc. has agreed pay $190 million for the drilling rights to nearly 90,000 contiguous acres prospective for the Marcellus shale from Dominion Transmission, a unit of Dominion Resources.

The majority of the acreage, which is associated with Dominion's Fink-Kennedy, Lost Creek, and Racket Newberne gas storage fields in West Virginia, lies in Lewis and Harrison counties. Consul figures that more than half of the acreage is prospective for wet gas.

Consol Chief Executive Officer J. Brett Harvey said the acquisition complements Consol's acreage position in Northwest Virginia and "could represent the largest untapped contiguous acreage in the southern core of the Marcellus shale."

The transaction is expected to provide Consol with more than 350 risked long lateral Marcellus shale drilling locations.

Consol is set to pay a total gross consideration of up to $190 million in two installments. Roughly half of the total was paid to Dominion when the deal closed in December, and the remainder is due over time as wells are drilled. Consol has also committed to be an anchor shipper on Dominion's transmission system.

Noble Energy Corp., Consol's joint venture partner in the Marcellus shale, has exercised its right to participate in the transaction at a 50% level.

Separately, Pittsburgh, Pa.-based Consol said that it experimented with enhanced completion and production techniques in the Marcellus shale during the past 18 months and plans to move toward large-scale application of these methods in the months ahead.

The techniques were recently utilized at several Marcellus shale wells. Consol said 11 wells drilled on three pads were completed with some combination of shorter stage lengths, reduced cluster spacing, and other enhanced production techniques.

Initial production from the wells averaged 10.7 MMcfed and ranged from 5.3 MMcfed to 18.4 MMcfed. Average lateral length was 5,300 ft. Consol figures the estimated ultimate recovery for the wells could approach 2.0 bcfe/1,000 lateral ft.

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