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NiSource Processor Slated for Mahoning County
YOUNGSTOWN, Ohio – A $300 million pipeline project extending from Columbiana County northward into western Pennsylvania calls for construction of a new processing plant somewhere in eastern Mahoning County, according to a presentation at the Youngstown Ohio Utica and Natural Gas Conference and Expo Thursday.
John Bonn, president of NiSource Midstream Services LLC, told an audience at the Covelli Centre that his company's Hickory Bend gathering and processing project, a joint venture with Hilcorp Energy, consists of a 50-mile large diameter pipeline that will run directly through Mahoning County.
"Near the middle of that line, rich gas will come to a point where we're going to install the first of several plants," he said, as he displayed a map above on a large screen. The screen showed the plant's proposed location as somewhere in eastern Mahoning County.
The new cryogenic plant would have a capacity of processing 200 million cubic feet of gas per day, and would be needed to separate liquid gas from dry gas, Bonn told the audience. The gas would then link up with a network of other transportation lines owned by companies such as Dominion.
"We're in the right-of-way acquisition phase right now. “We plan to have the plant running by the third quarter of 2013," he said.
The first customer for the project would be the NiSource/Hilcorp joint venture, but the system would be open to all operators engaged in oil and gas exploration in the Utica shale. "We expect that $300 million investment to grow and grow as we extend this system to accommodate production from additional producers in the area," Bonn said.
NiSource, the Indiana-based parent of Columbia Gas, announced in July (READ STORY) that it had secured a partnership with Houston-based Hilcorp. The partnership, called Pennant Midstream LLC, was created to ramp up exploration and midstream development in the Utica shale. The announcement did not specify the path of the pipeline, nor the location of the processing plant.
The first phase of the project consists of constructing a pipeline system capable of handling 400 million cubic feet of natural gas per day and a cryogenic plant able to process 200 million cubic feet of natural gas per day.
"It's an exciting time at NiSource," Bonn said.
About 1,500 people, and more than 100 vendors, attended the second annual Young conference Thursday, hosted by the Youngstown-Warren Regional Chamber. Companies representing a wide range of services for the oil and gas industry were represented this year, many of them at the event for the first time.
Other attendees came from much further away. A camera crew from a German/French television network examining Ohio's pivotal role in the upcoming presidential election was on hand to talk to vendors and film some of the speakers.
The YOUNG conference underscores the economic development potential of developing the Utica shale, said David Mustine, managing director for JobsOhio.
Mustine said that his office works closely with the Regional Chamber and partners such as TeamNEO to ensure businesses in this region have the capability to expand and meet the needs of this industry. "Second, we're proactively going after companies that we think should consider Ohio," he said.
The Utica shale is very high on the radar screens of large energy companies based in Texas or Oklahoma, Mustine said. "The other great thing, particularly In the Youngstown-Warren area, is you're very close to the Marcellus, and the activity has moved west, much closer to Mahoning County."
That places the Mahoning Valley in a strong position to lure companies not only interested in drilling in the Utica, but also the Marcellus shale in Pennsylvania. "We think the interest between the two is quite high."
Mustine said the interest is already evident from the investments made in infrastructure development throughout the Utica shale region. "That infrastructure is expensive, and companies believe there's going to be production," he said. "The amount of processing that's in place right now and underway would be six times the current daily production rate in our state."
He said that the Utica is likely to be developed over a long period of time, and the state is taking cues on how other shale plays have evolved in other parts of the country. "A lot of experts are comparing the Utica to the Eagle Ford play in Texas," he said. "So, we're watching that closely and learning what we can."
Harry Schurr, Consol Energy’s general manager of Utica operations, presented an overview of the Pittsburgh-based company and its emphasis on safety and transparency.
Schurr noted that Consol’s roots date back 160 years, and in many instances the company is dealing with the fourth generation of landowners.
Consol recently opened its Utica shale field office in Leetonia. In one year, he expects as many as 20 people to be employed at that office.
As for securing shale-related contracts with Consul, Schurr stressed the importance of safety and his company’s high expectations for quality performance.
The rapid development of the industry in the Marcellus shale “shows up where we’re going to be in the Utica shale,” he said. “This is a once-in-a-lifetime opportunity.”
Copyright 2012 The Business Journal, Youngstown, Ohio.