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Pennant's Cryogenic Plant Awaits Gas from Area Wells
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NEW MIDDLETOWN, Ohio -- Phase One of a multimillion-dollar cryogenic processing plant in Springfield Township is finished and ready for shipments of natural gas. Now, all that remains is for energy companies to send them that gas from wells they’ve drilled nearby.
"Our next big step is waiting for the producers to increase their drilling programs now that there's a place to process the gas," says Gerald Daugherty, plant manager of the Pennant Midstream LLC processing plant along State Line Road here. "We'll need about 25 million cubic feet to start up and get operating."
At this time, the plant doesn't have the inflow of natural gas to begin operations in earnest, Daugherty reports, but that's likely to change soon.
"As producers bring wells online and are able to flow gas into the facility, Hickory Bend will be capable of processing 200 million cubic feet per day," Pennant Midstream President Chad Zamarin said in a statement released Monday.
"This achievement contributes to increased shale production in the Appalachian Basin and is not only critical to unlocking the Utica shale play in Ohio, it is furthering economic development in the Mahoning Valley," he continued.
Pennant, a company formed by NiSource Midstream and Harvest Pipeline, a subsidiary of Hilcorp Energy Co., is building the $375 million Hickory Bend pipeline and processing system.
More than a year ago, the company announced its intent to build a large processing complex in Mahoning County as Hilcorp stepped up drilling activity in this portion of the Utica.
Hilcorp will supply gas from its wells via gathering pipelines to Pennant's new processing plant where natural gas liquids are separated from dry gas such as methane, Daugherty reports.
A 55-mile pipeline would stretch from Mercer and Lawrence counties in western Pennsylvania, through a portion of Mahoning County, and into northern Columbiana County and gather natural gas pumped from wells owned by Hilcorp and other producers, Daugherty says. That gas would be transported to the new cryogenic plant for processing.
Another 38-mile line dedicated strictly for natural gas liquids, or NGLs, would send this gas to a fractionation plant operated by UEO Buckeye in Harrison County for further processing. There that gas will be converted into specific, commercial-grade products such as butane, ethane and propane, Daugherty reports.
The Springfield plant has the capacity to process 200 million cubic feet of gas per day, Daugherty reports, and believes the operation will be at full capacity by the end of this year.
However, most wells in this region aren't yet in production because the area lacks adequate pipeline infrastructure.
According to the Ohio Department of Natural Resources, Hilcorp has drilled seven horizontal wells at its Carbon Limestone Landfill pad in Poland Township, one of which is in production. Another five wells are permitted for the site.
During the quarter ended Sept. 30, Hilcorp's Carbon Limestone well pumped out 3.4 million cubic feet of gas over 92 days, according to an ODNR report issued Dec. 31.
Another well -- the Salem-Grubbs well in Salem Township and the only one Hilcorp has drilled in Columbiana County thus far -- produced 3.7 million cubic feet of gas over 87 days.
Hilcorp is also an active driller just over the state line in western Pennsylvania, according to the Pennsylvania Department of Environmental Protection.
The company has 13 horizontal-well permits in Mercer County, Pa., records show. The latest production numbers, reflecting production from Jan. 1 to June 30, 2013, show that Hilcorp's James 1H well in Lackawannock Township yielded 341,000 cubic feet of natural gas over a seven-day period.
In Lawrence County, Pa., Hilcorp holds permits for 18 horizontal wells, three of which are producing, DEP records show.
Data from the same reporting period for the first half of 2013 shows that Hilcorp's Whiting 3H well in Pulaski Township produced 2.25 million cubic feet of gas over 180 days while its Whiting 4H well at the same site produced 1.9 million cubic feet of natural gas over the same number of production days.
The energy company's Kinkela 1H well, also in Pulaski Township, produced 2.32 million cubic feet over 129 days, according to DEP records.
While Hilcorp is the only producer that is a guaranteed customer, Daugherty says, other drillers in the region will require midstream processing to sell dry or wet gas.
"We're putting in other lines that will bring other people in," he says.
Among the other energy companies active in the northern tier of the Utica are Chevron, Royal Dutch Shell, BP America, Halcon Resources and Consol Energy.
As more customers come online, additional capacity would be required at the Springfield Township plant, Daugherty notes.
Work is expected to continue through this year and next year on Pennant Midstream LLC's natural gas processing plant as the Hickory Bend pipeline network takes shape. "We probably still have 100 people working here," he reports.
About 200 construction workers and tradesmen were on site during the peak construction period, Daugherty says.
Also, land is being cleared at the 90-acre site in Springfield Township to accommodate expansion of the plant, Daugherty reports. "We are expecting to be at capacity by the end of the year," he says. "There's a minor upgrade we can do in the interim before we start our second phase."
The second phase of the complex would consist of another plant capable of handling another 200 million cubic feet of natural gas.
"The whole goal is for this to be a 600-million-cubic-feet-a-day facility," he says. A second phase, that is, construction of another $200 million plant, should begin later this year.
"This work will be ongoing through this year and into next year," Daugherty says.
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Copyright 2014 The Business Journal, Youngstown, Ohio.
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