MarkWest Liberty Midstream & Resources—also known as MarkWest Energy—announced today it is expanding its processing and fractionation capacity in the Marcellus Shale in West Virginia (Marshall County) and Pennsylvania (Washington County). What exactly does that mean, and why should landowners care? MarkWest is a “midstream” company, providing processing, storage, transportation and marketing for natural gas. Think of midstream companies as bridges between energy companies that do the drilling, and the large pipelines that deliver natural gas to buyers. Along the way the gas must get from the well to a processor where it’s cleaned up and separated into different products. There are different types of chemical compounds in “natural gas” and impurities must be removed before it’s saleable. MarkWest provides processing, fractionation (a separation process), pipelines, compressor facilities and more.
The MarkWest announcement means drillers will have more capacity to clean up, transport and market the gas they discover. More capacity expands the market. The MarkWest announcement says they have “reached definitive agreements” which will allow them to expand operations, but it does not say which energy companies those agreements have been made with.
From the MarkWest press release:
DENVER—MarkWest Liberty Midstream & Resources, LLC, a partnership between MarkWest Energy Partners, L.P. (NYSE: MWE) and The Energy & Minerals Group, which prior to March 15, 2010 was named Midstream & Resources Funds, announced today that it reached definitive agreements with leading Marcellus producers that will result in MarkWest Liberty expanding processing and fractionation capacity in its rapidly growing Marcellus shale operations.
As a result of the new producer agreements, which include significant acreage dedications and other commitments, MarkWest Liberty will expand its Majorsville processing complex in northern West Virginia to process additional hydrocarbon-rich gas. The expansion is expected to be operational in the third quarter of 2011 and will increase the cryogenic processing capacity at the Majorsville complex to approximately 270 million cubic feet per day (MMcf/d). The natural gas liquids (NGLs) produced at the Majorsville complex will be connected via pipeline to MarkWest Liberty’s Houston, Pennsylvania NGL complex. When combined with the processing facilities currently operating or under construction at the Houston complex, MarkWest Liberty’s total processing capacity in the Marcellus will be approximately 625 MMcf/d by the end of 2011.
As part of its integrated midstream services in the Marcellus, MarkWest Liberty also announced that it is expanding the design capacity of its fractionation facility at the Houston complex to 60,000 barrels per day. MarkWest Liberty will utilize the fractionation facility and its transportation, storage, and marketing infrastructure to sell the NGLs into high-value markets in the northeastern United States. When combined with an existing 24,000 barrel per day fractionation, storage, and marketing facility near Portsmouth, Ohio, MarkWest’s midstream offering in the Marcellus and Appalachian basin will include nearly 85,000 barrels per day of fractionation, storage, and marketing capacity.
“We are pleased to announce new producer agreements and the expansion of our natural gas processing and fractionation capacity in the Marcellus to further solidify MarkWest Liberty’s role as the largest provider of midstream services in the rich-gas areas in southwest Pennsylvania and northern West Virginia,” commented Frank Semple, Chairman, President and Chief Executive Officer. “Since mid-2008 we have scaled rapidly to meet our customers’ requirements in the Marcellus. By the end of 2010 our joint venture with The Energy & Minerals Group will have invested more than $700 million to provide the critical midstream infrastructure necessary to economically develop the Marcellus and to meet our customers’ long-term needs. The Marcellus continues to change the face of natural gas production in North America and we intend to remain a leader in the development of this significant resource play.”*