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Fourth Plant Eyed for Kensington Gas Complex
SCIO, Ohio -- Just three months into production, a potential expansion of Utica East Ohio Buckeye's Kensington cryogenic plant in Columbiana County is already in the works, says a top oil and gas executive.
"We have a fourth plant that is planned to sit on that site," said Frank Tsuru, president of M3 Midstream, which along with Access Midstream and EV Energy Partners operate the UEO Buckeye system.
Initially, the plan was to have three processing operations, or "trains," at the Kensington site, Tsuru said. "We've got three sanctioned to be built and a fourth one in the event we need more processing capacity. We've already purchased the land to grow to four."
Tsuru made the comments shortly after officials wrapped up a media event Monday in Harrison County inaugurating UEO Buckeye's massive fractionation plant in Scio. More than 100 guests, including Gov. John Kasich, were on hand for a symbolic "valve turning" ceremony to open the new plant.
Kasich, who hours earlier addressed a crowd in Mahoning County during a ceremony opening a new processing plant in Springfield Township (READ STORY), said that the next step is to attract new companies and industries to the state that can benefit from accessible natural gas products.
"Think about compressed natural gas vehicles, think about steel companies that have high use of energy and get access to low-priced resources to run their facilities," Kasich said.
Wet gas and condensates are just as, if not more, valuable, he continued.
"Part of the reason this plant is here is because there's gold in them thar hills," the governor chuckled. "Isn't it great that America, for the first time, is getting into a place where it can be energy independent?
The Scio plant accepts natural gas liquids pumped along a 35-mile pipeline from the Kensington facility, and then processes that gas into specific liquid products such as ethane, butane and propane.
Construction on both plants is ongoing, Tsuru reported. The first phase of the Kensington plant is completed, and is able to process 200 million cubic feet of natural gas per day. A second phase now under construction there would boost processing capability by another 200 million and should be finished by December. An additional 200 million cubic feet of processing should be in by April.
With a fourth phase, Kensington would be able to process 800 million cubic feet of natural gas per day, Tsuru said. Another processing plant in Leesville is also under construction, and that plant will have the capacity to process 600 million cubic feet of gas per day.
Meantime, work on expanding the Scio fractionation hub continues, Tsuru said, as well as a new rail yard to transport liquids from the new plant.
The Scio plant is to contain three different fractionation plants, which at full capacity can handle 145,000 barrels of NGLs per day. Currently, the plant is processing 8,000 barrels a day and the first phase is designed to handle 45,000 barrels per day.
The commissioning of the Harrison hub means that the first phase of UEO Buckeye's $1.4 billion gathering and processing network is up and running, and there's likely more to come.
"We're really just scratching the surface," with the committed 1.2 billion cubic feet per day of UEO processing. Tsuru said. "We truly believe that the rich gas window is a very large window, spanning from Mahoning County all the way up to the Pennsylvania state line, down to Harrison County, through Noble County."
Some 2,000 skilled tradesmen were used to construct the plants, and about 900 are still working at the two sites. About 50 are permanently employed between the Kensington and Scio plants, along with 13 assigned to the new rail yard. By the end of 2014, the UEO system should employ 115 at the two plants and another 30 at the rail yard.
As processing plants come online, so too is development of the Utica's gathering infrastructure, says Mike Stice, CEO of Access Midstream. "We're actually putting pipelines in the ground, compressor stations, and meeting our target," he said. "At the end of the year, we'll have over 500 million cubic feet a day of wet gas being processed right here in central Ohio."
Stice says his company is just one part of what he believes is an immense natural gas play that's going to command billions of dollars of more investment. "We're going to be spending $1.6 billion over the next three years, and that will give us 1,200 miles of pipeline," he remarked. "So, there's an enormous amount of pipeline that we alone are doing."
Add in gathering and processing networks that other ventures are installing across the Utica and the number doubles, Stice said. "You're looking at 2,500 miles of pipeline just to connect the wet gas."
This infrastructure doesn't include future systems to harness dry gas such as methane to the east, and the untapped oil window to the west, Stice said.
But it's the rich gas that energy companies are finding in the Utica shale that is most encouraging, Stice said. "In today's economy, you want as much liquid content in the gas as possible, because those NGLs get priced at a premium. Natural gas prices right now are quite modest."
UEO Buckeye's customers -- Chesapeake Energy, Total, and EnerVest, for example -- are very excited about well production and the mix of NGLs and condensate these wells generate.
Stice said he's still "incredibly bullish" about the Utica, despite those who expressed disappointment at the weak oil returns in the west. "When you think about the wet gas play, it has been exactly what they expected."
And, although the oil window has yet to produce, Stice said that it's just a matter of time before exploration companies get the technology right and kick-start production in the oil window. "We'll solve it, in time," he said.
"But, in the meantime, we have the wet gas window and the dry gas window ready to go. I'm incredibly encouraged by what's here," Stice said.
Copyright 2013 by The Business Journal, Youngstown, Ohio.
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