Ohio’s natural gas industry is about to get a $1 billion investment.
The state is getting its sixth natural gas-processing plant, plus a new pipeline to carry liquids produced in the Utica shale industry.
The newest processing plant for natural gas would be located near Uhrichsville, in southern Tuscarawas County. The associated pipeline would carry natural gas liquids — like ethane, butane and propane — from Ohio, Pennsylvania and West Virginia to the Gulf Coast for processing.
No price tag was disclosed, but some observers have said costs for the two projects would approach $1 billion.
The midstream joint venture was unveiled Wednesday by two companies: Houston-based Kinder Morgan Energy Partners LP and Denver-based MarkWest Utica EMG LLC.
The cryogenic plant will be designed to handle up to 400 million cubic feet per day of natural gas, in two phases. It will be built on a 220-acre site Kinder Morgan has under option south of Newport in Rush Township.
It would handle gas from Utica shale wells in Carroll, Columbiana, Mahoning and Trumbull counties. It could also get rich-gas gas — that contain other components like propane and ethane — via MarkWest pipelines from Harrison, Belmont, Guernsey, Noble and Monroe counties.
The first phase is expected to begin operations in the fourth quarter of 2014 with the second phase shortly after that.
The Tuscarawas County site is big enough to handle up to 1 million cubic feet per day, the companies said.
After processing, the natural gas would be shipped to other pipelines for shipment to market.
The new liquids pipeline would run from the plant and calls for converting 900 miles of the existing Tennessee Gas pipeline from Tuscarawas County to Natchitoches, La., from natural gas to liquids. That pipeline is 24 or 26 inches in diameter.
The plan would also require the building of 200 miles of new pipeline from Natchitoches to Mont Belvieu, Texas, or southern Louisiana.
The two companies are looking at building a new fractionation facility or using third-party fractionation facilities on the Gulf Coast to separate and process the natural gas liquids.
The pipeline is slated to have an initial capacity of 200,000 barrels per day. That could be expanded to 400,000 barrels a day with the addition of pump stations later.
Subject to shipper commitments and permits, that pipeline is expected to be in service in the fourth quarter of 2015.
The project would also require that 65 miles of the Tennessee Gas Pipeline in northern Ohio be converted into a collection system for so-called rich gas or natural gas with liquids.
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.
“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 news release.
The pipeline is seen to be “by far the most efficient project for the Marcellus and Utica producers to access the Gulf Coast natural gas liquid markets and is another critical step in support of our long-term objective of providing our producer customers with multiple market options and maximum value for their natural gas liquid production,” said MarkWest chairman, president and CEO Frank Semple.
The joint venture would own the processing complex on a 50-50 basis and MarkWest Utica EMG would operate its facilities.
MarkWest Utica was formed by MarkWest Energy Partners and the Energy and Minerals Group.
It is building natural gas-processing plants at Cadiz in Harrison County and at Seneca in Noble County.
Additional processing plants in Ohio are being built in Carroll, Mahoning and Columbiana counties.
To date, only the plant in Columbiana County is operating.
Another pipeline has been proposed to carry liquids from Ohio to the Gulf Coast.
Williams, based in Tulsa, Okla., and Boardwalk Pipeline Partners of Houston have formed a joint venture: Bluegrass Pipeline LLC. Its 1,153-mile pipeline would include new and existing pipelines. It could be in operation by late 2015.
It includes 500 miles of new pipeline in Ohio and Kentucky with connections into West Virginia and Pennsylvania. It would connect to an existing pipeline in western Kentucky and run to the Gulf Coast.
Bob Downing can be reached at 330-996-3745 or firstname.lastname@example.org