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Dominion Scouting Ohio Sites for Processing Plants
YOUNGSTOWN, Ohio – Dominion, one of the largest energy suppliers in the country, is scouting sites in Ohio for future plants that would process natural gas drilled from the Utica shale, a company executive said Monday.
"The shale industry is driving our business right now," said David Mordan, director of natural gas operations for Dominion Transmission. "We've looked at other sites in Ohio. We've been here for a long time and we want to continue that."
Dominion Resources is constructing a $500 million processing plant in Natrium, W. Va., just south of Wheeling in Marshall County. The plant is scheduled to come online by the end of this year, and would be capable of processing natural gas liquids extracted from the Marcellus shale in western Pennsylvania and the Utica, a tight rock formation buried thousands of feet below eastern Ohio.
The Natrium plant is expected to employ 44 full time, 34 hourly and 10 in management, Mordal said. Temporary construction jobs could swell to as many as 800 during the mid-summer construction season as the company completes the operation, he reported.
Dominion would join two other energy projects in Ohio seeking to step up midstream and processing activity in the Utica. Earlier this year, MarkWest Energy Partners, Denver, announced a $500 million plan to develop two processing plants in Harrison County and Noble County. Also, Chesapeake Energy Corp. and its partner, M3 Midstream/Momentum, are looking to construct a $900 million extraction and fractionation system that starts in Columbiana County and runs south to Harrison County.
"From what I've seen, there's enough to go around," Mordan said shortly after he finished a presentation at Youngstown State University's Sustainable Energy Forum. "It's a huge play, and there's certainly a lot of opportunity."
Processing plants are integral in developing the Utica, which is largely considered a liquids-rich play. Energy companies are suspending drilling operations in search of dry gas because the price of natural dry gas has plummeted to a point where exploration is unprofitable.
However, "wet" gas windows that hold reserves of ethane, butane and propane are hot prospects at the moment, since these products are commanding much higher prices than dry gas. These liquids need to be processed and separated from dry gas, and then be further processed into a variety of natural-gas liquids.
In Ohio, Dominion subsidiary Dominion East Ohio already has a vast gathering and transmission network, Mordan said. The company owns 1,196 miles of transmission and storage lines in Ohio, plus another 1,400 miles of gathering lines.
"The market is pretty good right now, with all the investment in the plants coming online," Mordan said. "We're starting to see a big ramp up for availability for these products."
Scott Hallam, manager – development and operations for Chesapeake Midstream Management, said that his company expects to have about 70 employees working out of its Canton office by the end of the year, and about 200 once the Utica is fully ramped up.
"We operate about 70 miles of pipeline throughout Ohio," he said. "Today we employ engineers, construction specialists, right-of-way specialists and operation technicians." The company also employs route development specialists, whose responsibility is to canvass areas on foot and plot the most efficient and least disruptive pipeline route, he said.
"Engineers are our primary horsepower in our field office," Hallam said. "They do a lot of the front-end planning, system planning and engineering on how we install pipeline and compression facilities."
He noted that Chesapeake is still aggressively pursuing pipeline development in the Utica, primarily in Carroll, Jefferson and Harrison counties. These gathering systems will help support the two plants now under development in the Utica, he said.
The Kensington plant in southern Columbiana County, Hallam said, is a cryogenic processor that reduces the temperature of the gas to between 90 and 150 degrees below zero. Once that gas is chilled, the wet gas and dry gas can be separated.
Once the dry gas and wet gas is separated, the liquids gas could be transported via pipeline to the proposed fractionation plant in Harrison County. There, the wet gas is separated into varieties such as ethane, butane and propane. The Harrison County plant will have storage capacity of 870,000 barrels and fractionation capacity of 90,000 barrels.
These products are then marketed and sold all across the world.
Unprocessed natural gas could trade at about $2.30 per thousand cubic feet on the market today, Hallam said. "But if you could bring that gas to a processing plant, it would instantaneously move it to $6 or $7 per mcf," he said. "That's the economic driver associated with processing, and why processing is so important to midstream companies today."
Copyright 2012 The Business Journal, Youngstown, Ohio.