Welcome to the Business Journal Archives
Search for articles below, or continue to the all new BusinessJournalDaily.com now.
Search
Marathon's Wellsville Project Links to Cornerstone
![](https://archive.businessjournaldaily.com/sites/default/files/MarathonWellsville.jpg?1387028858)
WELLSVILLE, Ohio -- Opportunities in the Utica shale of eastern Ohio have convinced one of the largest refining companies in the country to step up its investment here.
Marathon Petroleum Co. LP, based in Findlay, expects to spend between $400 million and $500 million to upgrade its transportation and midstream network in the Utica, the company says.
Among these projects is a multimillion-dollar investment at the Wellsville Intermodal Facility in Columbiana County, where Marathon is hoping to move ahead with construction of an oil/gas transfer hub in conjunction with Harvest Pipeline Inc., an affiliate of Hilcorp Energy Co.
“We’re ready to go. Marathon’s ready to go,” says Tracy Drake CEO of the Columbiana County Port Authority, which owns the Wellsville park. “We just need the Army Corps of Engineers to sign off on it.”
Marathon wants to construct a transfer plant on 3.6 acres at the Wellsville site. The hub would allow trucks that transport oil and natural gas liquids drawn from processing plants in the Utica shale to unload their cargo through a pump station at the site. The oil and gas would be transferred to Marathon storage tanks and from there be loaded onto tanker railcars or barges that dock on the Ohio River.
The liquids would then be transported by rail or barge to centers for further processing, Drake says.
“It would be able to handle four to six trucks at a time at the site,” Drake says. “Marathon’s got a full engineering team and they’re putting it together.”
There are a few issues related to flood control that the Army Corps needs to approve before work could begin. “We’re just waiting for the permit,” Drake says.
The Marathon terminal would be similar to a $10 million project underway by Hilcorp subsidiary Arrowhead Utica Pipelines, which is constructing a similar transfer station on 22 acres at the opposite end of the park.
Under a separate agreement with Marathon, Arrowhead would send gas and liquids via an underground pipeline to Marathon’s tank farm. Those liquids would also be transferred to either railcars or barges bound for other markets.
Larry Heck, president and owner of Pier 48 Stevedoring LLC, a barge loading business at Wellsville Intermodal, says the transfer pipeline leading from the Arrowhead site to the Marathon terminal is in place.
“This is the part of the infrastructure that makes it all work,” Heck says. “It’s a step in the right direction.”
He explains that his business isn’t directly affected by the Marathon and Arrowhead developments – Pier 48 handles only dry bulk materials – but oil and gas exploration stands to increase volumes substantially.
Among Heck’s clients is Cimbar, a company that produces barium sulfate. The barium is mined and transported via barge to Wellsville where it is processed and used as “mud,” or lubricants for drilling operations at well sites in the Utica.
“We’ve done 20 to 22 barges of barite per month,” he reports. “The more drilling, the more materials we’ll be handling.”
Work is still needed to upgrade the rail spur leading into the site. Last month, the port authority hired MS Consultants Inc., Youngstown, to study the best location to develop a new rail spur at the southern end of the Wellsville park where Arrowhead is constructing its project.
According to a presentation at Hart Energy’s DUG East Conference in Pittsburgh by George Shaffner, Marathon’s senior vice president of transportation and logistics, the company expects to spend between $400 million to $500 million across the Utica over the long term to cultivate its oil and gas reserves.
The Wellsville terminal, Shaffner showed, would provide Marathon with truck-to-barge capacity of six million barrels per day, and another 24 million barrels per day for the Arrowhead project.
Among the other investments Marathon intends to make over the course of the next decade are capital expenditures directed to the acquisition of new river barges, a new Utica pipeline, the repurposing of existing pipelines, an upgrade of its crude oil truck fleet and improvements to the company’s refinery in Canton.
Marathon Petroleum is the fourth-largest refiner in the United States and holds an extensive terminal and pipeline network that consists of lease, full ownership, or partial ownership interests in 8,300 miles of pipelines, most of that east of the Mississippi River, according to Shaffner’s presentation. The company owns more than 140 transports and 1,900 railcars either leased or owned.
Marathon also operates one of the largest private inland bulk liquid barge fleets in the country. It consists of 15 owned inland tugboats, and 177 owned and 14 leased barges, Shaffner’s presentation showed.
However, to reach the Utica’s full potential would require more pipeline construction to string together a network of natural-gas liquids processing stations and Marathon sites.
Initially, the plan is to construct a condensate, crude and natural gasoline pipeline that links three major processing plants in the Utica with Marathon’s Canton refinery. This project – dubbed the Cornerstone Pipeline – would originate at MarkWest Energy Partners’ new cryogenic and fractionation plant in Cadiz in Harrison County.
The 49-mile, eight-inch diameter pipeline would then connect to M3 Midstream’s new fractionation plant in Scio and another M3 cryogenic plant under construction in Leesville. The project is expected to cost about $140 million.
Garry Peiffer, president of Marathon’s Master Limited Partnership, MPLX GP, said during a conference call with analysts Dec. 4 that construction on the Cornerstone project should begin by early 2016 and be operational by the end of that year.
Plans include a short pipeline connection from M3’s Kensington cryogenic plant in Columbiana County into a Marathon line that runs east from the company’s East Sparta, Ohio, terminal to another storage site in Midland, Pa.
Eventually, another short pipeline would be built to connect an existing Marathon line running from Steubenville to Youngstown with the Wellsville truck terminal.
“They’ll bring it to the site via vehicle right now,” says the port authority’s Drake, who notes a decision on the project by the Army Corps of Engineers could come within weeks. “We need it. Marathon needs it. And the village of Wellsville needs it.”
EDITOR'S NOTE: This story appears in the MidDecember edition of The Business Journal.
Copyright 2013 The Business Journal, Youngstown, Ohio.
CLICK HERE to subscribe to our free daily email headlines and to our twice-monthly print edition.