Next Pipeline Phase Begins for Hickory Bend Project
PETERSBURG, Ohio -- The build-out of the second phase of Pennant Midstream LLC's Hickory Bend gathering and processing systems has begun and is likely to employ more skilled building tradesmen than the first segment, a union official says.
"They're looking to use about 100 more workers this time," reports Rocco "Rocky" DiGennaro, business agent for Local 125 of the Laborers International Union. "From our union, they'll be about 55."
Pennant Midstream, an entity created by NiSource, parent of Columbia Gas, and Houston-based Hilcorp Energy, is developing a $300 million natural gas gathering and processing network in northeastern Ohio that extends from Mercer and Lawrence counties in Pennsylvania, through Mahoning County, and into Columbiana County.
The system will gather natural gas produced from Hilcorp wells exploring the Utica shale and transport the gas to a $150 million cryogenic processing plant under construction in Springfield Township.
This week, surveyors were out assessing a large clearing off Garfield Road where the second leg of the pipeline project will pass.
"They're just getting started," DiGennaro reports. "They've got crews clearing, doing environmental work, and boring work."
The project entails picking up where the first phase of the pipeline ended. The initial build-out consisted of a single lateral running from Hilcorp's Carbon Limestone Landfill well that temporarily feeds into a Dominion East Ohio line. Once the Springfield plant is finished, the gas would eventually be transported there for processing.
Hilcorp has drilled one horizontal well at the landfill site and has permits for at least six more, according to records provided by the Ohio Department of Natural Resources.
The second phase of Hickory Bend encompasses building a gas header to the plant that extends 18.5 miles from Petersburg to Leetonia in Columbiana County, DiGennaro says. Nearby wells would run gathering lines to the main 20-inch pipe and ship it directly to the Springfield plant for processing.
All told, the number of local building tradesmen on this portion of the pipeline project alone could hit about 270, he reports. A third phase in western Pennsylvania is also planned.
DiGennaro says all indications are that Hilcorp is committed to long-term exploration and presence here. "If we build lines into the plant, we also have to build them out," he explains.
Between contractors replacing older pipelines, new construction on cryogenic plants, and other assorted distribution work, DiGennaro says the oil and gas business consumes about 60% of his union's business.
"It's all good stuff," he remarks.
The core of the Hickory Bend development lies in a $150 million cryogenic processing plant under construction along State Line Road in Springfield Township. The new plant would take natural gas from nearby wells and chill it to 150 degrees below zero, thus separating "dry" gases such as methane, from "wet" gases such as butane, ethane and propane.
The Utica shale in eastern Ohio has attracted major energy companies that have invested billions of dollars in developing the play because of the likelihood of vast reserves of rich condensate and wet gas. However, for these wells to become productive, it's necessary to build adequate processing and pipeline infrastructure to market and sell the product.
That brings with it a sense of urgency to get these processing plants up and running, energy officials have said.
"We expect the Hickory Bend plant to be completed by December," reports Sarah Barczyk, spokeswoman for Pennant Midstream. The wet gas header extending from Columbiana County to the plant is expected to be finished sometime during the fourth quarter.
Hilcorp's Carbon Limestone well, in production, has pumped dry gas into the Dominion line since May, she notes.
The Pennsylvania leg is expected to be operational at a later date, Barczyk says. "The Pennsylvania portion is expected to be in service during the second quarter of 2014," she reports.
Meantime, other processing and pipeline ventures are moving forward.
A partnership between M3 Midstream, Access Midstream and EV Energy Partners is building the $900 million UEO Buckeye processing and pipeline network, which includes a large cryogenic plant near Kensington in Columbiana County and a fractionation plant in Harrison County.
"The construction of M3's UEO Buckeye natural gas processing and fractionation project is continuing on schedule, with the initial phase now in the final stages of construction," the company said.
Kensington's first phase would be able to process 200 million cubic feet of natural gas per day. A total of three phases of like capacity are planned for the site.
Other potential pipeline projects are slowly beginning to surface, including the prospect of another processing plant for the Utica in Mahoning County.
Earlier this year, Blue Racer Midstream, a venture between Dominion and Caimen Energy II, announced a new build-out for its Utica footprint that included a new processing plant for Petersburg, and another in Berne, Ohio.
Casey Nikorlic, spokeswoman for Blue Racer, reports that the full potential of the Utica is still being evaluated, and with it, the Petersburg project.
Initially, the Petersburg facility would start up with a capacity of processing 200 million cubic feet of natural gas per day, Nikorlic said.
"The play as a whole is being evaluated and the delineated," she says. "All signs are positive right now."
A Dominion cryogenic plant in Natrium, W.Va., is expected to come online soon and is working though tests and trials before it can become operational, Nikorlic says. "It's in startup mode right now," she says.
And, local building trades are hoping that Bluegrass Pipeline, a venture between Williams and Boardwalk Pipeline Partners that would build new legs from Pennsylvania, through Ohio and into Kentucky, will pass through the Mahoning Valley.
"We're starting to hear a little about the Bluegrass line," Local 125's DiGennaro notes. "They're saying it'll move right through here."
The bottom line for DiGennaro is that he hopes the Utica can provide long-term, sustainable opportunities for his membership and other tradesmen well into the future.
"They're telling us that the Utica is still in its infancy and we don't even know what's coming yet," DiGennaro says. "It's crazy. But it's a good problem to have."
Copyright 2013 The Business Journal, Youngstown, Ohio.
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