CLEVELAND: Dominion East Ohio, the primary supplier of natural gas to eastern Ohio for decades, is finding itself at the center of Ohio’s Utica shale boom.
The search for new sources of natural gas is happening directly under Dominion East Ohio’s 20,000 miles of pipelines, putting the company in an advantageous position for transporting the newfound hydrocarbons.
“We’re very strategically placed,” said Anne E. Bomar, senior vice president and general manager of the company. Natural gas producers “love us,” she said. “Geology and geography drive costs. We’re in a very good place. …We want to optimize our infrastructure.”
The company is talking to more than 24 drilling companies about transporting natural gas, oil and lucrative “wet gases” from the Utica shale, and can provide 40 interconnections with seven major pipelines that cross the eastern United States.
And because Dominion has excess capacity, it has an advantage over competitors who want to build lines, a process that can take several years, Bomar said.
“We’re excited about the scope of our opportunity.”
Taking the lead
Dominion East Ohio is a natural gas distribution subsidiary of Virginia-based Dominion Resources Inc.
Dominion Resources already is positioned to be a player in the Marcellus and Utica shale development that stretches from New York through Pennsylvania and into Ohio, but the company is spending more than $1 billion through its subsidiaries to maintain its advantage.
That includes $200 million in the East Ohio facilities, $500 million on a processing plant and $600 million for West Virginia and Pennsylvania pipelines.
The parent has 12,000 miles of natural gas transmission, gathering and storage pipelines plus 6,000 miles of electric transmission lines and 27,600 megawatts of electric generation providing electric and gas to customers in 15 states.
The East Ohio unit does not produce natural gas, but instead distributes to 1.2 million customers in Northeast Ohio who consume about 97,000 mcf (1,000 cubic feet) of gas per year.
Because of its extensive pipeline system, the company already handles about 80 percent of the natural gas produced in Ohio, Bomar said.
The surge in gas production in eastern Ohio and surrounding states is having a big impact in Northeast Ohio, Bomar said.
The typical residential customer has saved about $200 on natural gas bills in the last year due to the supply and demand, she said.
And because the price of natural gas has plummeted, drillers are targeting areas known to also contain more lucrative wet gasses, found extensively in eastern Ohio.
To serve that special need, Dominion East Ohio has 100 miles of wet-gas pipelines and plans to add 300 more miles, a move designed specifically to keep Ohio Utica shale producers happy.
In all, the company expects to spend $200 million in pipeline extensions, compressor stations, measuring stations and other gathering facilities in eastern Ohio in the next two to three years, Bomar said.
Her company is also working with Dominion Transmission, a sister company in Clarkburg, W.Va., that provides similar transmission services for the Marcellus shale.
Dominion Resources has had a hand in natural gas processing for nearly a century and is expanding to capitalize on the new well production.
Last August, the parent company announced it was proceeding with a large natural gas processing and fractionation or separation plant at Natrium, W.Va, a $500 million project.
The first phase, scheduled to begin operation in December, includes facilities to handle 200 million cubic feet of natural gas per day and fractionate or separate out 36,000 42-gallon barrels of natural gas liquids per day.
Dominion acquired the 70-acre Natrium site — in Marshall County about nine miles north of New Martinsville — from PPG Industries.
Natrium is designed to remove all of the various hydrocarbons and fluids from the raw natural gas to produce what is known as pipeline-quality dry natural gas. The high-value liquids that are separated may include ethane, propane, butane, iso-butane and gasoline.
That phase of the project will begin operation at capacity, said spokesman Neil J. Durbin.
The largest customer is Chesapeake Energy Marketing Inc., a wholly owned subsidiary of Oklahoma-based Chesapeake Energy Corp.
The firm, the largest player in Ohio’s Utica shale, has contracted for 100 million cubic feet per day — or about half of the plant’s startup capacity.
Chesapeake has an option for additional capacity in Phase 2, which would double the size of the Natrium facility to handle 400 million cubic feet of natural gas and fractionate 59,000 barrels of natural gas liquids per day.
That phase is dependent on market demand, Durbin said.
The plant is expected to employ about 50.
“Natrium will be a world-class facility,” said Paul Ruppert, senior vice president of Dominion Transmission, in a company statement.
Added Gary Sypholt, chief executive officer of Dominion Energy: “The Natrium site is an ideal location. We will have the capability to access production in both the Marcellus and Utica shale regions and ship products via barge, rail, truck and pipe, thus offering significant value to producers.”
Dominion has processed its natural gas at the nearby Hastings Extraction Plant in Pine Grove, W.Va.
The first compressor station was constructed there in 1902. In 1913 it became the site of the first oil absorption processing plant in the U.S., separating natural gasoline from the natural gas stream.
Today Hastings is a leading Appalachian basin supplier of propane, butane, iso-butane and gasoline.
Dominion isn’t without competition, though.
Two other natural gas-processing facilities and wet gas-separation plants have been proposed by other companies in eastern Ohio: in Harrison and Columbiana counties.
Reversing the flow
The new Natrium plant will connect with Dominion Transmission’s recently converted TL-404 pipeline.
Last July, the 26- to 30-inch line changed from transporting natural gas northward to transporting the wet gases southward from the Utica shale wells.
The change affected 27 miles of pipeline in northeast West Virginia and eastern Ohio.
The wet gases are being transported by Dominion East Ohio to its Mullett Station in southeast Ohio’s Monroe County, where they transfer into Dominion Transmission lines to cross the Ohio River to the Hastings plant, which in 2010 processed about 11,000 barrels of liquids.
The new TL-404 line may not be enough, though.
Dominion East Ohio is looking at an addition line from the Ohio River across from the new Natrium plant to Mahoning County for new wet-gas collection. A second line would run to the northwest in Belmont and Harrison counties.
New compression facilities may also be needed as the pipeline system expands, Dominion East Ohio said.
Across the river, Dominion has also invested $600 million to add 110 miles of new lines in West Virginia and southwest Pennsylvania. The so-called Appalachian Gateway project, which required four additional compressor stations, is scheduled to be completed in September.
The Utica shale is big for Ohio, Bomar said.
“It’s substantial and has the potential to shape our economy for years to come,” she said. “What we’ve got is a long-lasting game-changer. … And we intend to be a big part of that.”
Bob Downing can be reached at 330-996-3745 or email@example.com.