Gulfport, Rice Energy Create Utica Joint Venture
OKLAHOMA CITY – Gulfport Energy Corp. has signed a letter of intent with Rice Midstream Holdings LLC, a wholly owned subsidiary of Rice Energy Inc. to develop a natural gas and water gathering system in eastern Ohio’s Utica shale.
The system would be constructed to support Gulfport’s dry gas wells in eastern Belmont County and Monroe County, the company said.
Gulfport will own 25% of the joint venture and Rice will own the remaining 75%. The system will be supported by long-term fee-based service agreements with Gulfport. Rice will be responsible for constructing the system and operating the joint venture’s assets.
Gulfport and Rice plan to invest $520 million to build gathering and compression systems and another $120 million to for water assets over the next six years. Each partner will fund its proportionate share of the project. Construction on the project is expected to begin immediately and the first deliveries are planned for mid-2016.
The project calls for developing a gas gathering system consisting of 165 miles of pipelines with multiple connections to interstate pipelines including Rockies Express, ET Rover, TETCO, and Dominion East Ohio. The system will also require about 50,000 horsepower of compression for gathering and delivery into various downstream interstate pipelines, and development of a fresh water distribution system to deliver water to well pads for completion activities.
Gulfport intends to dedicate 77,000 acres, including recent transactions with American Energy-Utica LLC and Paloma Partners III LLC.
“Gulfport has a strong history with Rice in the Utica shale and we are excited to expand our relationship by creating further alignment with one of our midstream providers,” Michael G. Moore, Gulfport president and CEO, said in a statement.
Daniel Rice, CEO of Rice Energy, added in a statement that the “joint venture will be one of the premier midstream systems in the prolific dry gas core of the Utica and adds to Rice’s attractive inventory of potential drop down candidates to Rice Midstream Partners.”
Copyright 2022 The Business Journal, Youngstown, Ohio.