Williams Successfully Blocks Blue Racer Midstream IPO…for Now

Here’s a story that slipped under our radar for the past few months, but is now out in the open for all to see. In June Blue Racer Midstream, a gathering and processing system with 700 miles of pipelines in Ohio and West Virginia in the “heart” of the Marcellus/Utica, began the process to file for an initial public offering (IPO)–to become a publicly traded company. Blue Racer hopes to raise $600-$750 million with an IPO, money to expand. Midstream giant Williams, which owns roughly 29% of Blue Racer, sued in July to block the IPO.
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Bomb Threat at Blue Racer’s WV Natrium Plant – Nothing Found

Last Thursday morning at 6:30 am Blue Racer Midstream’s Natrium (Marshall County, WV) natural gas processing plant received a phoned-in bomb threat. Plant personnel immediately contacted law enforcement (local, state and federal) who swept the plant with bomb-sniffing dogs. Nothing was found.
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South Korean Company Invests $300M in Blue Racer Midstream

Blue Racer Midstream assets (click for larger version)

SK Holdings is one of the largest conglomerates in South Korea, and the 57th largest company in the world. Bet you didn’t know that! SK is composed of 95 subsidiary companies with 70,000 employees and has its fingers in many pies, including telecommunications, manufacturing and chemicals. One of SK’s core businesses is energy. Yesterday the company made a major investment in energy by investing in Blue Racer Midstream, a gathering and processing system with 700 miles of pipelines in Ohio and West Virginia, the heart of the Marcellus/Utica.
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Dominion Sells Its 50% Share in Blue Racer Midstream for $1.5B

In September, MDN told you that Dominion Energy had sold two “merchant” (non-regulated) natural gas-fired electric generating plants for $1.23 billion to Starwood Energy. And at the same time, Dominion announced it was shopping its 50% ownership stake in Blue Racer Midstream (see Dominion Sells 2 Gas-Fired Plants; Blue Racer Midstream For Sale). The sale of the power plants and potential sale of Blue Racer is aimed at helping Dominion pay down debt. The Blue Racer sale is no longer a potential, but a reality. Yesterday Dominion announced it is selling its share in Blue Racer to private equity investment firm First Reserve for $1.5 billion.
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Dominion Sells 2 Gas-Fired Plants; Blue Racer Midstream For Sale

Dominion Energy has found a buyer for two of its natural gas-fired electric generating plants, one located in Pennsylvania, the other in Rhode Island. In July MDN told you that Dominion was shopping the two plants, hoping to raise $1+ billion (see Dominion Looking to Sell Gas-Fired Power Plants in PA, RI). One plant, the Fairless Power Station, is located in Bucks County, PA near Philadelphia. The other, Manchester Street Power Station, is located in the People’s Republic of Rhode Island. So why would Dominion, a company that really digs natgas, want to dump two of its natgas power generating plants situated in large, urban areas? In a word, regulation, or rather lack of it. Both of the plants Dominion wants to dump are “merchant plants”–meaning they sell electricity on the open market, at market rates. Regulated plants, on the other hand, have their prices determined by quasi-governmental agencies. Selling electric that’s regulated means the potential upside is limited, but it also means you are guaranteed a certain price and can count on receiving that price year in and year out. In the lingo of high finance, being regulated “derisks” a company–makes revenue streams predictable, which investors like. So Dominion is on a mission to (a) pay down debt by selling assets like these two merchant power plants, and (b) provide more revenue certainty for investors. And it looks like they achieved their goal, selling the two plants for $1.23 billion to Starwood Energy. In the same Dominion announcement about the Starwood sale, the company said they will continue to shop their 50% ownership stake in Blue Racer Midstream, which is the first we’ve heard that Dominion is looking to unload their share. Dominion says there is “strong interest” in buying it…
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Blue Racer Midstream: The Veins at the Heart of the Utica Shale

Blue Racer Midstream is a pipeline and processing plant company–a joint venture between Caiman Energy II and Dominion Energy–that owns several natural gas processing and fractionation plants, 570 miles of natgas gathering pipelines, and 151 miles of NGL and condensate pipelines in OH and WV. The company’s primary focus from the beginning has been on handling and processing “wet gas” in eastern OH, northern WV and western PA. Blue Racer processes and transports NGLs (natural gas liquids) to market by all means possible–pipeline, rail and yes, even barge (see Blue Racer Barges NGLs to Gulf Coast on the Ohio River). One of the NGLs, ethane, plays a big role for Blue Racer–present and future. It’s time for an update on Blue Racer Midstream, the veins at the heart of the Utica Shale…
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FERC Rejects Blue Racer Midstream Plan to Change NGL Pipe Rates

We have to confess this story is a bit complex to understand. We will take a stab at making the complex understandable. Blue Racer Midstream has a subsidiary called Blue Racer NGL Pipelines LLC. The subsidiary operates the G-150 pipeline system, which provides batched propane and butane service. G-150 currently, located in West Virginia, connects a Natrium, WV processing plant to the TE Products Pipeline Co. (TEPPCO). The G-150 pipeline will also have a connection to the Mariner East 2 Pipeline when it goes into service, theoretically in June of this year. Currently the G-150 is flowing about 6,300 barrels per day of product through it–only 20% of its capacity. When the connection with ME2 is up and running, Blue Racer says it can handle 30,000 bbl/d through the G-150. However, Blue Racer itself signed up for most of the capacity (27,000 bbl/d). Blue Racer recently asked the Federal Energy Regulatory Commission (FERC) to allow it to have two different rate structures–a lower rate for “committed” shippers (Blue Racer itself with its 27,000 bbl/d) and a higher rate for uncommitted shippers. FERC rejected the request pointing out that existing shippers with contracts–namely Chesapeake Energy–would be left out in the cold in favor of Blue Racer moving its own volumes at lower prices. Yes, it’s complicated. Bottom line, Blue Racer can’t do what it wants and has to go back to the drawing board…
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Blue Racer Barges NGLs to Gulf Coast on the Ohio River

Blue Racer Midstream logoThis post will not make anti-fossil fuel nutters happy. You know how antis have moaned and groaned at the prospect of allowing barges on the Ohio River to transport produced water–naturally-occurring salty water that comes out of the ground long after fracking operations are over. Antis complained so much that the Obama Administration politically prevented the Coast Guard from moving forward with a barging plan (see Coast Guard Caves to Political Pressure, No Wastewater Barging). The “funny” thing is, there are substances 100 times more toxic than produced water traveling on barges up and down the Ohio every day! But let’s not let facts get in the way of a good [drug-induced hippie] protest, right? In June we brought you the story that Blue Racer Midstream, a joint venture between Caiman Energy II and Dominion that owns several natural gas processing and fractionation plants, 650 miles of natgas gathering pipelines, and 155 miles of NGL and condensate pipelines in OH and WV, is planning to barge NGLs (natural gas liquids) from their facilities in WV down the Ohio River to the Gulf Coast (see Blue Racer Midstream to Begin Barging on Ohio River This Year!). The exciting news is that Blue Racer began their NGL barging program in October…
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Blue Racer Midstream to Begin Barging on Ohio River This Year!

Ohio River bargeIt will be fun to watch how anti-fossil fuelers will take this news–and attempt to spin and demagogue it. Blue Racer Midstream, a joint venture between Caiman Energy II and Dominion, owns several natural gas processing and fractionation plants, 650 miles of natgas gathering pipelines, and 155 miles of NGL and condensate pipelines in OH and WV. Blue Racer is a privately-held company, so we don’t have SEC reports and public statements about the company. However, every now again Blue Racer’s upper management shows up at an industry conference, as they did a few weeks ago at the Utica Midstream Seminar in Canton, OH (see Updates on 3 Major OH Pipelines at Utica Midstream Seminar). At the event, Blue Racer CEO Stephen Arata confirmed that in the third quarter of this year the company will begin to use barges on the Ohio River to transport “products” from its Natrium, WV processing plant…
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OH Man Blames Pipeline Construction for Driving his Car into Ditch

Blue Racer MidstreamA Washington County, OH man is not happy with Blue Racer Midstream’s construction work on a new pipeline in the area. Heavy rain washed out gravel used as fill for the project. The man was on his way home (rural area) and ran into a ditch because, he says, the work was not done well and is “destroying” area roadways. Here’s the story of a man, a car, a ditch and a rainy night…
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Blue Racer Midstream: Keeping a Sharp Eye on the Bottom Line

Blue Racer Midstream is a joint venture between Caiman Energy II and Dominion. It is a privately-held company, so we don’t have SEC reports and public statements about the company from which to gage how it’s doing. However, every now again Blue Racer’s upper management shows up at an industry conference. Last week Blue Racer’s relatively new CEO, Stephen Arata, spoke at the Hart Energy Marcellus-Utica Midstream event in Pittsburgh. It’s no surprise that Arata said the company has had to curb spending and growth, giving the downturn in oil and natgas prices…
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Blue Racer Midstream CEO Says Utica Shale Better than Marcellus

In April 2015, Stephen Arata, then Chief Financial Officer for Blue Racer Midstream, became the CEO of Blue Racer (see Blue Racer Midstream CFO Promoted over President to Become CEO). While Blue Racer operates in both the Utica and Marcellus Shale plays, it is the Utica that’s turned Mr. Arata’s head and is the focus of Blue Racer’s operations. In an article published in the July issue of The American Oil & Gas Reporter titled “Midstream Adjusts For Emerging Utica,” Mr. Arata makes this prediction about the Utica: “Arata predicts development of the Utica is about to take off. ‘The rock in the Utica is great,’ he enthuses. ‘The core of the rich part of the Utica is better than anything in the southwestern Pennsylvania Marcellus. People will be surprised how fast the Utica develops.'” Arata makes a number of boasts about Blue Racer, including the claim they are the only midstream company that can get “rich gas” out of Washington County, PA. Give this excellent article (with a number of Arata brags) a read…
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Blue Racer Midstream Looks to Raise Another $300M from IOUs

Last November Blue Racer Midstream–the pipeline and processing plant company formed in 2012 as a joint venture between Caiman Energy II and Dominion and focused totally on the Marcellus and Utica Shale region–floated IOUs (called senior notes) due and payable in 2022 for $550 million. Must be nice to write out an IOU and get big bucks. Blue Racer is back for more. The company announced yesterday they’re floating another round of IOUs due payable in 2022 in an effort to raise another $300 million…
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Blue Racer Brings OH Processing Plant Online, Continues to Expand

Blue Racer Midstream, a joint venture between Caiman Energy II and Dominion, shared the good news yesterday that a second 200 million cubic feet per day (MMcf/d) cryogenic processing plant at its Berne Natural Gas Processing Complex in Monroe County, OH (known as Berne II, yes, they name these things) is now online and operating. Berne II doubles the processing capacity at the plant. Blue Racer also operates a processing AND fractionation complex in Natrium, WV. A 30-mile Y-grade (NGL) pipeline connects the two facilities so that Berne can send along its NGLs to Natrium for further processing. Fractionaters like those in Natrium separate NGLs into their component hydrocarbons, including ethane, butane, propane, etc. In addition to Berne II going online, Blue Racer gave us a general update on the expanding health of their operation: They have 14 long-term major Marcellus/Utica drilling customers; 650 miles of gathering pipelines in OH and WV with another 200 miles of new gathering lines under construction; and gathered volumes have doubled, and processed volumes have tripled in just the last year…
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Blue Racer Midstream CFO Promoted over President to Become CEO

Some changes at the top of Blue Racer Midstream–the pipeline and processing plant company formed in 2012 as a joint venture between Caiman Energy II and Dominion and focused totally on the Marcellus and Utica Shale region. Jack Lafield, founder and CEO of Caiman Energy (sold to Williams for $2.5 billion) and current CEO of Caiman Energy II and Blue Racer, has stepped down as CEO of both companies. Lafield will continue to serve as chairman of the board for Caiman Energy II and remains a member of the board for Blue Racer. In his place Stephen Arata, CFO for both companies, has been named CEO for both Caiman Energy II and Blue Racer Midstream. Although the announcement that Lafield is “retiring” from his post as CEO of both Caiman and Blue Racer as of today (see below), the official biography for Arata on the Blue Racer website says the transition became effective on April 1st–not sure why there is a discrepancy. What’s equally intriguing (to MDN) is that Caiman/Blue Racer’s current president and COO, Rick Moncrief, was not promoted to the top spot and instead Arata, the CFO, was–which is not the typical succession path…
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Dominion Says Their Pipelines Gather 80% of All Ohio Natural Gas

The Guernsey County Energy Coalition heard from utility and midstream giant Dominion last week at their regular meeting in Cambridge, OH. Mack Smith Jr., Dominion’s manager of commercial gas services, had some fascinating things to say. One of them was this: “Dominion gathers about 80 percent of all Ohio gas and interconnects with seven major pipelines to distribute gas to markets, and to sell storage services to marketers and end users.” Did you know that Dominion gathers 80% of all Ohio natural gas? We sure didn’t! Here’s some more pickings from what Smith said last Thursday…
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