MarkWest to Build $1B Dry Gas Gathering System

YOUNGSTOWN, Ohio – MarkWest Energy Partners and The Energy & Minerals Group, a private equity company, say they plan to invest $1 billion over three years to build a large-scale gathering pipeline system in the Utica dry gas region in eastern Ohio.

MarkWest says the new system will be underpinned by a long-term, fee-based contract with Ascent Resources-Utica LLC, a subsidiary of Ascent Resources LLC. Under the terms of this agreement, Ascent has dedicated the production from approximately 100,000 gross acres in northern Belmont and Jefferson counties. The new system will also gather “significant dry gas volumes from other producers,” MarkWest said.

Belmont and Jefferson counties “may well be the most economic area of the Utica dry gas play,” said Frank Semple, chairman, president and CEO of MarkWest, in a prepared statement. “The Utica shale includes some of the most productive and economic dry gas acreage in the United States and producers are quickly capitalizing on this tremendous opportunity.”

The $1 billion system will be designed to gather more than 2 billion cubic feet per day (Bcf/d) of gas and could ultimately consist of more than 250 miles of pipeline and more than 200,000 horsepower of compression, according to the announcement. Initial operation is expected to begin by year-end.

The gathering lines “will provide numerous takeaway options,” MarkWest said, including connections to the Ohio River System, a gathering trunkline project capable of delivering gas to Rockies Express Pipeline, Texas Eastern Transmission through its new OPEN project, ET Rover Pipeline, and other interstate pipelines. Development will occur under a new joint venture between MarkWest and EMG, which will be owned two-thirds by the MarkWest and one-third by EMG.

MarkWest and EMG, together with Summit Midstream Partners, already operate one of the largest gathering systems in the Utica through their Ohio Gathering Co. LLC joint venture. Ohio Gathering’s system consists of hundreds of miles of low- and high-pressure pipelines and numerous compression facilities throughout southeastern Ohio.

MarkWest, based in Denver, announced July 13 its $20 billion merger agreement whereby it would become a wholly owned subsidiary of MPLX, based in Findlay, Ohio. The transaction is expected to close in the fourth quarter.

MPLX is a master limited partnership formed in 2012 by Marathon Petroleum Corp. to own, operate, develop and acquire pipelines and midstream assets related to the transportation and storage of crude oil, refined products and other hydrocarbon-based products.

Ascent Resources LLC (formerly American Energy Appalachia Holdings LLC) was created in December through the combination of Ascent Resources Utica Holdings LLC and Ascent Resources Marcellus Holdings LLC. In the Appalachian Basin, Ascent has approximately 280,000 net acres purchased or under contract.

Pictured: MarkWest operations in Ohio.

Copyright 2022 The Business Journal, Youngstown, Ohio.