Shell, Williams Launch Midstream Venture in Utica
YOUNGSTOWN, Ohio – Add yet another multimillion-dollar midstream project to the portfolio of oil and gas processing systems targeting the Marcellus and Utica shale plays.
Three Rivers Midstream, a joint venture between Tulsa-based Williams Partners L.P. and Royal Dutch Shell, says it will develop new infrastructure in northwestern Pennsylvania that includes an initial capital investment to build $150 million cryogenic gas plant capable of processing 200 million cubic feet per day.
The location of the plant has not been determined, according to a press release issued by Williams Friday. And, the company stated, the initial investment is likely to climb as the joint venture's business increases. The initial plant is expected to be placed into service by the second quarter of 2015.
"This new joint venture builds on our strategy of creating large-scale infrastructure solutions that will provide Shell and other producers with access to the best markets for their natural gas and natural-gas liquids, whether they be in the Northeast and the Gulf Coast," Alan Armstrong, CEO of Williams Partners' general partner, said in a statement.
Armstrong said the system would tie into Shell's proposed ethylene cracker plant, a project still under consideration for Monaca, Pa. The midstream project would also serve another massive joint venture between Williams and Boardwalk called the Bluegrass Pipeline, a proposed artery extending from the Utica region to the Gulf of Mexico (READ STORY). The proposed Bluegrass pipeline is targeting a late 2015 in-service date.
The infrastructure project would carry natural gas from Shell's subsidiary, Shell Western E&P Inc., or SWEPI, as it drills wells in its production area, which encompasses 275,000 acres. The joint venture also plans to pursue gathering and processing agreements with other producers in the liquids-rich areas of northeast Ohio.
SWEPI is among the most active oil and gas exploration companies in Lawrence County, just across the Ohio line from Mahoning County. Since 2010, the energy giant has secured 29 permits for horizontal wells in the county, according to data from the Pennsylvania Department of Environmental Protection.
In nearby Butler County, Pa., just east of Lawrence, SWEPI has 42 horizontal wells under permit, DEP records show.
In Mercer County, Pa., SWEPI holds seven permits, the state DEP reports, and has secured three in Crawford County.
The joint venture also plans to pursue gathering and processing agreements with other producers in the liquids-rich area of the Utica shale in northeastern Ohio as well as northwestern Pennsylvania.
"Similar to our strategy of creating a significant supply hub in the dry gas area of northeast Pennsylvania, Three Rivers will create a major supply hub in northwest Pennsylvania, but with the added benefit of large-scale NGL pipeline infrastructure and expanded market options to support wet-gas production," Armstrong said.
Williams will own and operate nearly all of the midstream gathering lines and the processing equipment, while Shell will have the right to invest capital and increase ownership until mid-2015.
Williams Partners focuses on natural gas transportation; gathering, treating, and processing; storage; natural gas liquid fractionation; and oil transportation. The partnership owns interests in three major interstate natural gas pipelines that, combined, deliver 14% of the natural gas consumed in the United States.
Copyright 2013 The Business Journal, Youngstown, Ohio.
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