MarkWest Inks Two New Deals to Expand Processing in WV

MarkWest has been in the news a lot lately, signing a raft of new agreements and even buying out a competitor. Last Friday, MarkWest announced they had signed an agreement (terms not disclosed) to expand MarkWest’s processing capacity in the Marcellus Shale to handle more Chesapeake production. The areas covered by the agreement include northern West Virginia (Brooke, Ohio and Marshall counties), and Washington County in Pennsylvania.

MarkWest announced a second agreement on Friday, this one with Antero Resources to expand operations in Doddridge and Harrison counties, also in northern WV.

From the MarkWest press release:

MarkWest Energy Partners, L.P. (MarkWest) today announced the execution of two major agreements related to its ongoing development of the hydrocarbon-rich area of the Marcellus shale. The first agreement is a long-term fee-based arrangement with affiliates of Chesapeake Energy Corporation to expand its Marcellus gas processing capacity to support Chesapeake’s rapidly growing rich natural gas production in an approximately 185 square mile dedication area, which includes portions of Brooke, Ohio, and Marshall Counties in northern West Virginia and Washington County in southwestern Pennsylvania. The second agreement is a long-term fee-based arrangement with Antero Resources Appalachian Corporation (Antero Resources) to install significant gathering facilities in support of Antero’s rapidly growing rich natural gas production in Doddridge and Harrison Counties in northern West Virginia.

In support of the agreement announced today with Chesapeake, MarkWest will expand the gas processing capacity at its Majorsville, West Virginia processing complex by 400 million cubic feet per day (MMcf/d) from 670 MMcf/d to approximately 1.1 billion cubic feet per day (Bcf/d). This expansion capacity is being provided in exchange for the significant dedication of acreage made by Chesapeake to the Majorsville processing complex. MarkWest will construct two new 200 MMcf/d cryogenic gas plants that are expected to be completed in late 2013 and mid 2014.

The gathering facility expansion to support Antero Resources will expand MarkWest’s existing gathering operations in southwestern Pennsylvania into a key part ofWest Virginia and includes the installation of two large high-pressure gathering headers and associated compressor stations in Doddridge and Harrison Counties,West Virginia. The new gathering system will have the capacity to initially deliver more than 300 MMcf/d of Antero’s rich gas to MarkWest’s Sherwood gas processing complex. The first phase of the gathering system will be completed in the third quarter of 2012 in conjunction with the completion of the 200 MMcf/d Sherwood I processing facility. MarkWest previously announced the expansion of the Sherwood processing complex to include the construction of the 200 MMcf/d Sherwood II processing facility, which is expected to come online in the second quarter of 2013 and will increase the total capacity of the Sherwood gas processing complex to 400 MMcf/d.

The Majorsville expansion will increase MarkWest’s total processing capacity in the rich gas area of the Marcellus to more than 2.1 Bcf/d, essentially all of which is supported by long-term agreements with MarkWest’s producer customers. All of the natural gas liquids (NGLs) recovered at MarkWest’s four large Marcellus processing complexes in southwest Pennsylvania and northern West Virginia are or will be connected through MarkWest’s extensive NGL gathering system for delivery to its Houston, Pennsylvania fractionation, storage, and marketing complex. MarkWest previously announced that, to support its significant Marcellus expansions, it is constructing a second fractionation complex in Harrison County, Ohio, in conjunction with its Utica shale expansion and associated Utica shale joint venture. The Houston, PA and Harrison, OH fractionation complexes will be connected through MarkWest’s NGL gathering system to provide significant reliability, flexibility and critical downstream marketing options. Following the completion of its announced Marcellus and associated Utica gas gathering, processing and fractionation facilities, MarkWest and its affiliates will have the capacity to produce approximately 155,000 barrels per day (Bbl/d) of purity ethane and 120,000 Bbl/d of propane and heavier NGLs. This represents more than 10 percent of the total US supply of purity ethane and more than 5 percent of the total US supply of propane. The first phase of MarkWest’s purity ethane facilities are expected to come online in mid 2013 in conjunction with the completion of Mariner West, a pipeline project jointly developed by MarkWest and Sunoco Logistics L.P. (NYSE: SXL) to deliver Marcellus ethane to petrochemical markets in Sarnia, Ontario, Canada.

Both of the projects announced today were included in MarkWest’s previously announced 2012 capital investment estimates. MarkWest will discuss both projects in more detail at the Partnership’s first quarter earnings call.

“We are excited to expand our existing relationships with Chesapeake and Antero,” said Frank Semple, Chairman, President and Chief Executive Officer of MarkWest. “MarkWest continues to focus on providing best of class fully integrated midstream services that are critical to the rich-gas development in the northeast United States and we are pleased to further strengthen our leading midstream presence in the liquids-rich area of the Marcellus.”*

*MarkWest Energy Partners (May 4, 2012) – MarkWest Energy Partners Announces Significant Long-Term Fee-Based Agreements with Chesapeake Energy and Antero Resources to Expand its Marcellus Shale Midstream Facilities in West Virginia