Houston-based Kinder Morgan Energy Partners is forming a joint venture to build a natural gas processing plant and natural gas liquids pipeline aimed at producers in the Utica and Marcellus shales of Ohio, Pennsylvania and West Virginia. Kinder Morgan Energy Partners announced Wednesday that it and MarkWest Utica EMG would form a midstream joint venture to develop two projects.
The first is a 400 million-cubic-foot-per-day cryogenic natural gas processing complex on a 220-acre site Kinder Morgan has under option in Tuscarawas County, Ohio. The second is a natural gas liquids pipeline that will originate at the processing complex and transport natural gas liquids to Gulf Coast fractionation facilities. It is slated to have an initial capacity of 200,000 barrels per day.
“The combination of Kinder Morgan’s strategically located and existing pipeline assets that traverse through the heart of the Utica and Marcellus shale plays, along with MarkWest’s existing and significant midstream footprint throughout the Utica and Marcellus shale plays, should provide significant growth opportunities for the (joint venture),” Kinder Morgan Chairman and CEO Richard Kinder said in a statement. MarkWest Utica EMG would anchor the first of two planned cryogenic processing plants, slated to be in service by the fourth quarter of 2014. A second plant could be in service shortly after, depending on the timing of customer commitments.
The joint venture would own the processing complex on a 50-50 basis and MarkWest Utica EMG would operate its facilities. Kinder Morgan and MarkWest Utica EMG also will develop the pipeline — converting more than 900 miles of Kinder Morgan’s 24-inch and 26-inch Tennessee Gas Pipeline system currently in natural gas-service from Tuscarawas County to Natchitoches, La., and building about 200 miles of new pipeline from Natchitoches to South Louisiana, to Mont Belvieu in Southeast Texas, or to both areas.
Subject to shipper commitments and permits, that pipeline is expected to be in service in the fourth quarter of 2015. Costs of the projects weren’t disclosed. Kinder Morgan would own at least 75 percent of the pipeline and MarkWest Utica EMG would have the option to invest up to 25 percent. Kinder Morgan would operate the pipeline.
Kinder Morgan Energy Partners owns an interest in or operates more than 54,000 miles of pipelines and 180 terminals. MarkWest Utica EMG is itself a joint venture between midstream firm MarkWest Energy Partners and Energy & Minerals Group, a private equity firm that focuses on investing in the natural resource industry.