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NiSource, Hilcorp Target Eastern Ohio for Utica Plant
MERRILLVILLE, Ind. – NiSource Inc. and Houston-based Hilcorp Energy announced today the creation of a joint venture that calls for building a new natural-gas liquids processing plant in northeastern Ohio and another 50 miles of pipeline infrastructure there and in western Pennsylvania.
The first phase of the project would constitute an initial investment of about $300 million, NiSource said, and work on the plant and new pipelines could begin later this year.
"This joint venture, involving one of America's most successful and independent energy production firms, leverages NiSource's extensive asset base and operating experience in the Utica shale region," said Robert Skaggs, NiSource president and CEO, in a prepared statement.
The joint venture creates a new entity, Pennant Midstream LLC, that will construct 50 miles of 20-inch gathering pipeline across northeastern Ohio and western Pennsylvania. The partnership will also construct and install a cryogenic processing plant in Ohio capable of handling 200 million cubic feet of natural gas per day.
NiSource Midstream Services LLC will operate the system, initially expected to provide about 400 million cubic feet of both dry and wet gas, the company said. The project is expected to be online during the third quarter of 2013, and will be marketed to other active producers in the area. Pennant is reviewing several downstream options with other parties, including the development of its own fractionation plants.
"This project reinforces our leadership position in the Utica and our ability to quickly respond to the critical needs of our producer customers," said Jimmy Staton, executive vice president and CEO of NiSource Gas Transmission & Storage Group. "We continue to evaluate a variety of options focused on leveraging our additional acreage holdings and asset position in the Utica shale, and we expect the timing of future projects to correspond generally to the producer activity in those areas."
The partnership also calls for a separate joint venture with Hilcorp to develop liquids-rich gas acreage in the Utica/Point Pleasant shale formations in northeastern Ohio and western Pennsylvania.
Since April, Hilcorp has been issued 11 new drilling permits in Lawrence County, Pa., just across the Mahoning County border.
NiSource, which owns Columbia Gas of Ohio, earlier this year announced two other projects that include the construction of processing plants.
In March, the company said it would build a processing plant in Harrison County that would be connected with a 90-mile pipeline that extends south from Columbiana County to Monroe County in southeastern Ohio.
NiSource also announced in April that it had forged a partnership with XTO Energy, a subsidiary of Exxon Mobil, to build a 70-mile natural gas pipeline across southwestern Pennsylvania.
Reported by Dan O’Brien in Youngstown, Ohio