Kinder Morgan Energy Partners L.P.
) has teamed up with MarkWest Utica EMG L.L.C - a joint venture
MarkWest Energy Partners, L.P.
) and The Energy and Minerals Group ("EMG") - to form a midstream
JV to pursue two new projects.
The two parties have signed a letter of intent to support oil and
gas producers in the Utica and Marcellus shales in Ohio,
Pennsylvania and West Virginia.
The first project will utilize an existing, 220-acre site that
Kinder Morgan has under option and will include the development
of a 400 million-cubic-foot-per-day (MMcf/d) cryogenic processing
complex in Tuscarawas County, Ohio. It is a 50:50 JV, with
MarkWest Utica EMG being the operator. The existing 220-acre site
is expandable and can accommodate over 1 billion cubic feet per
day of processing capacity.
The JV's first of two planned 200 MMcf/d cryogenic processing
plants, to be commissioned by the fourth quarter of 2014, would
be anchored by MarkWest Utica EMG. The second 200 MMcf/d plant
will be brought online shortly thereafter, subject to the timing
of customer commitments.
The project would provide rich-gas volumes to the JV processing
complex through the extension of its existing rich-gas gathering
system in Harrison, Belmont, Guernsey, Noble and Monroe counties
in Ohio. The JV processing complex would supply new customers in
Carroll, Columbiana, Mahoning and Trumbull counties in northern
Ohio and offer a critical full-service solution.
A new pipeline is likely to be constructed by the JV to transfer
NGLs produced at the JV processing complex into MarkWest and
MarkWest Utica EMG's extensive NGL gathering network for
short-term and long-term fractionation at its Ohio and
Pennsylvania fractionation and marketing complexes.
The second project comprises the development of an initial,
200,000 barrels-per-day (bpd), C2+ natural gas liquids (NGL)
pipeline that begins at the planned JV processing facilities in
Ohio and carries NGLs to Gulf Coast fractionation facilities.
The pipeline would be build through the conversion of over 900
miles of Kinder Morgan's 24-inch and 26-inch Tennessee Gas
Pipeline systems currently in natural gas service from Tuscarawas
County, Ohio to Natchitoches and the construction of about 200
miles of new NGL pipeline from Natchitoches to Mont Belvieu
and/or south Louisiana.
Both the parties are also appraising constructing new
fractionation facilities, as well as utilizing third-party
fractionation facilities throughout the Gulf Coast.
The NGL pipeline, scheduled to commence operations in 2015, would
be expandable to 400,000 bpd with the addition of pump stations.
Kinder Morgan, the operator, will hold 75% of the NGL pipeline
while MarkWest Utica EMG would have the option to invest up to
Kinder Morgan carries a Zacks Rank #3 (Hold). However, there are
other stocks in the oil and gas sector -
Cabot Oil & Gas Corp.
) - which hold a Zacks Rank #1 (Strong Buy) and are good
CABOT OIL & GAS (COG): Free Stock Analysis
DRIL-QUIP INC (DRQ): Free Stock Analysis
KINDER MORG ENG (KMP): Free Stock Analysis
MARKWEST EGY PT (MWE): Free Stock Analysis
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