The surge in gas production in the Marcellus shale and imminent follow-on supply from the Utica shale have created a need for processing capacity to extract and fractionate NGLs and pipelines to move the hydrocarbons both within the region and between the producing area and Gulf Coast.
By 2017, the Utica shale is forecast to supply about 5% of the nation's NGLs, trailing closely behind the Marcellus at 9%. Those yields depend on gas processing plants, construction of which is well under way with many more planned.
Processing, fractionation
MarkWest is a very active gas processing developer. It is expanding midstream operations throughout the Northeast and has 21 major processing and fractionation projects under construction. These projects, at eight large complexes in Ohio, Pennsylvania, and West Virginia, will increase MarkWest's total processing capacity to more than 4 bcfd and total fractionation capacity—the ability to separate liquids extracted from inlet gas streams—to nearly 300,000 b/d by yearend 2014.
A joint venture between MarkWest Energy and the Energy & Minerals Group has started operations of two gas processing plants with a combined 325 MMcfd of capacity in the Utica shale since 2012. The joint venture is currently building two more 200-MMcfd plants expected to be in service mid-2014.
At Majorsville, MarkWest expects to complete an additional 200-MMcfd plant during first-quarter 2014 and will bring on a sixth plant there in early 2016. Completing these plants will bring the complex to more than 1 bcfd of capacity. Also, MarkWest soon will bring online at Majorsville its second large de-ethanizer in the Marcellus, doubling the company's purity ethane fractionation capacity in the play to 78,000 b/d. Ethane produced at the new Majorsville fractionation plant will initially be delivered into the Mariner West pipeline and, later, to the ATEX and Mariner East pipeline projects.
In Ohio, MarkWest's 200-MMcfd Seneca I plant will be followed by a second 200-MMcfd plant by yearend and a third 200-MMcfd plant by second-quarter 2014. The Seneca complex is MarkWest Utica EMG's second major processing complex in the Utica. The Seneca complex is supported by long-term, fee-based contracts with several producers. Antero Resources Corp. will anchor the complex, which will also support rich-gas development by Gulfport Energy Corp., Rex Energy Corp., PDC Energy Inc., Consol Energy Inc., and others.
The Seneca complex is connected to MarkWest Utica EMG's Cadiz complex in Harrison County, Ohio, by a high-pressure, rich-gas header system.
Companies such as Access Midstream, Nuevo Midstream, and Dominion are also building processing and fractionation plants which will eventually necessitate construction of Y-grade pipelines, which carry easily condensable fractions of natural gas (propane and heavier but not methane or ethane). Access Midstream's Kensington Phase II plant will come on line in January at 45,000 b/d, with Phase III following in April. It will have a total capacity of 135,000 b/d at Harrison shortly after that.
Nuevo expects to bring Ramsey 3 online in early 2014, raising total cryogenic gas processing capacity there to 310 MMcfd. As producers in the Ramsey area continue to define the extent of each play and as drilling programs evolve, Nuevo said, it will explore a fourth expansion to the Ramsey site, which could add 200 MMcfd in capacity as early as 2015.
Dominion expects to bring its Natrium 2 gas processing plant in Marshall County, WV, on line at 200 MMcfd in 2014. The company has contracted to deliver 500 MMcfd of natural gas produced in West Virginia to various interconnections with pipelines in Ohio. Half of this total will go from the Fink-Kennedy area to an interconnection with Texas Eastern at Mullet, Ohio, and the Rockies Express Pipelines in Clarington, Ohio, on a 15-year term beginning November 2016. The other half will be shipped to interconnections in Lebanon, Ohio, beginning June 2014 for terms as long as 21 years.
Three Rivers Midstream (Williams/Shell) plans to bring a 200 MMcfd plant on line in northeastern Pennsylvania by 2015.
NGL pipelines
The burst of gas production and processing in the Marcellus-Utica requires pipelines to carry well fluids to plants for processing (which basically removes impurities like sulfur from natural gas and extracts NGLs) and fractionation (which separates the liquids into distinct products). Some fractionation is performed close to the producing area, and some is done much farther away.
Pennant Midstream LLC is building a 12-in. outside-diameter (OD), 38-mile NGL pipeline connecting the Hickory Bend cryogenic gas processing plant in New Middletown, Ohio, to M3 Midstream LLC's Utica East Ohio (UEO) Kensington gathering, processing, and fractionation complex in Columbiana County, Ohio. The pipeline will have 90,000-b/d initial capacity.
Pennant expects the new pipeline to enter service in July 2014. It said initial NGLs delivered to the UEO Kensington complex would be moved by existing infrastructure to the fractionator at the UEO Harrison Hub in Harrison County, Ohio, offering producers in the northern Utica shale improved access to wet gas gathering and processing, as well as residue gas and NGL takeaway
Sunoco expects Mariner East 1 will be moving propane from western Pennsylvania to Marcus Hook by mid-2014, with full 70,000 b/d of ethane-propane reached by mid-2015. A Mariner East 2 open season, during which prospective shippers indicate needs for capacity, is under way.
MarkWest's open season for the Liberty Ethane Pipeline ended on Dec. 13. MarkWest describes the pipeline as part of its comprehensive ethane solution in the Northeast US, which will include purity ethane transportation infrastructure and de-ethanization plants in Pennsylvania, West Virginia, and Ohio. Liberty Ethane Pipeline will transport purity ethane from Majorsville, Pa., to Houston, Pa.
Enterprise Products partners began injecting ethane into the Appalachia-to-Texas Express (ATEX) pipeline in late November. The company expects commercial service to begin January 2014. The 1,230-mile ATEX pipeline starts in Washington County, Pa., and is, or will be, connected to four fractionators in the Marcellus-Utica region, including the MarkWest Houston plant in Pennsylvania and Cadiz plant in Ohio, 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 at least 265,000 b/d. Firm ship-or-pay transportation agreements with 15-year terms support the project. About 65,000 b/d of those contracted volumes are expected to move at start up, ramping up to more than 130,000 b/d transported beginning in 2018. ATEX ends at EPP's Mont Belvieu, Tex., complex.
MarkWest Utica EMG formed a joint venture with Kinder Morgan to open its own 1,100-mile NGL pipeline to the Gulf Coast, expand northern Ohio rich-gas processing capacity, and add Gulf Coast fractionation capacity.
Kinder Morgan and MarkWest will develop a 200,000 b/d C2+ (ethane and heavier) NGL pipeline running from a gas processing complex it plans to build in Tuscarawas County, Ohio, to Gulf Coast fractionation capacity. The pipeline will include 900 miles of converted Kinder Morgan line and about 200 miles of new-build. The pipeline, called Utica Marcellus Texas Pipeline (UMTP), would be expandable to 400,000 b/d. The companies expect the pipeline to enter service in the fourth quarter of 2015, pending sufficient shipper interest and regulatory approvals.
In connection with that project, Kinder Morgan Energy Partners and Targa Resources Partners on Dec. 20 reported they had signed a letter of intent to form a joint venture to build NGL fractionation facilities at Mont Belvieu to serve Utica and Marcellus producers. Located adjacent to existing Targa facilities, the new capacity would provide fractionation services to UMTP customers up to about 150,000 b/d initially and eventually to the pipeline's full capacity 400,000 b/d if warranted by demand.
Separately, Kinder Morgan Cochin LLC signed a letter of intent with Nova Chemicals Corp. to lay a 210-mile, 10-in OD pipeline to carry NGL from multiple Utica-shale fractionation sites in Harrison County, Ohio, to its Cochin Pipeline near Riga, Mich., for onward delivery to Windsor, Ont. It expects the Utica-to-Ontario Pipeline Access (Utopia) to begin transporting 50,000 b/d of NGL, including ethane and propane, in mid-2017.
Williams and Boardwalk also have a Utica-Marcellus to US Gulf Coast project proposed, Bluegrass, featuring new construction to Hardinsburg, Ky., and converted line from there to Eunice, La.
Natural gas pipelines
Among natural gas pipelines, Spectra's OPEN project will deliver 550 MMcfd of Ohio Marcellus and Utica shale natural gas to the US Gulf Coast and East Coast. The $500-million project is underpinned by anchor shipping agreements with Chesapeake Energy Marketing and another producer. The project features 73 miles of new 30-in. OD pipe from the Kensington gas processing plant in the Utica shale to Texas Eastern Pipeline's Clarington compressor station. A new 18,800-hp compressor station will be added to the line, with five existing Texas Eastern stations totaling 139,450 hp reversed to east-west flow. All components are expected to be operational by second-half 2015.
Hess Corp. has agreed to terms with PVR Partners LP for the latter to build, own, and operate a 45-mile natural gas trunkline and associated gathering pipelines and equipment serving Hess's lean gas production in the Utica shale in eastern Ohio. PVR will build a minimum 20-in. OD trunk line with an expected minimum capacity of 450 MMcfd and connections to the Texas Eastern and Rockies Express interstate pipelines, with possible future connections to other interstate systems.
PVR will also build gathering pipelines, compression stations, dehydration units, and other related equipment to gather Hess's production from the dedicated acreage. PVR expects the project to begin operations in late 2014, with additional producers signing on for capacity and gathering services as construction progresses.