2 Major Investors in Caiman Energy II Looking to Cash Out

Caiman Energy II is an interesting midstream (pipeline & processing plant) company. Caiman is part of a spaghetti mix of intertwined midstream operators in the Marcellus/Utica. Caiman is related to (backed by) Williams, and Caiman is the operator of Blue Racer Midstream. In April 2012, Caiman sold their West Virginia assets (Caiman “I”) to Williams for $2.5 billion. These days, via Blue Racer, Caiman is focused on the Ohio Utica. The news that recently caught our eye is that two of the investors in Caiman Energy II are interested in selling their ownership stake. Not Williams, which remains the primary investor–but EnCap Flatorck Midstream and Oaktree Capital want out…
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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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Blue Racer to Build New Wet Gas Plant in Mahoning County, OH

Listen up supply chain companies who want to get involved with a big new project coming in the Ohio Utica Shale. Blue Racer Midstream, the $1.5 billion joint venture between Caiman Energy II, LLC and Dominion formed in December of 2012, plans to build a new wet gas processing facility in Mahoning County by June 2016. The new facility, located near Petersburg in Springfield Township appears to be “back on track” according to an article in the Youngstown Business Journal
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Blue Racer: Natrium Plant Back Online, New Customers, Adds Barging

Big news from Blue Racer Midstream. Last September there was an explosion and a fire “isolated to a small area” at the Blue Racer Natrium processing and fractionation facility in Marshall County, WV (see Explosion/Fire at Blue Racer’s Natrium, WV Processing Plant). The fire knocked the plant offline for customers needing to process wet gas. At least two (perhaps more) customers found other sources to process their wet gas (see Blue Racer’s Natrium Plant to Remain Offline Until Jan 2014). According to a single sentence buried in a press release issued yesterday, the Blue Racer Natrium plant is finally, after five long months, back online. No date was given for when it resumed operations–presumably yesterday or over the weekend. The statement says, “The Natrium I processing unit has recently returned to service following a temporary shutdown that occurred after a fire damaged the unit.”

No mention of how long it was offline (five months!) or the work done to get it back online. Probably the lawyers telling them to keep their mouth shut. Anyway, we’re happy to see it back up and running. In addition to that very big news (which was decidedly downplayed in the press release), Blue Racer also announced yesterday they’ve picked up several new customers for an expansion at the Natrium processing/fractionation plant (see who below). Finally, Blue Racer announced that in addition to the current rail, truck and pipeline they use to move NGLs (natural gas liquids) from the plant, they’re adding barging down the Ohio River. Notwithstanding the downplayed reopening of the Natrium plant, this is one of the most enlightening press releases from a midstream company we’ve seen in some time…
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Blueracer Natrium Wet Gas Plant Remains Offline, How Much Longer?

Last September there was an explosion and a fire “isolated to a small area” at the Blueracer Natrium processing and fractionation facility in Marshall County, WV (see Explosion/Fire at Blue Racer’s Natrium, WV Processing Plant). The fire, which “burned itself out,” knocked the plant offline until this January. Because of the outage, at least two (and perhaps more) companies found other sources to process their wet gas (see Blue Racer’s Natrium Plant to Remain Offline Until Jan 2014). However, not all drillers have had success in finding other sources to process their wet gas and are stuck, waiting for the Blueracer Natrium plant to re-open.

The latest word from Blueracer on when they will reopen the plant, which doesn’t seem encouraging…
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Blue Racer’s Natrium Plant to Remain Offline Until Jan 2014

Blue Racer Midstream, a joint venture between Dominion Resources and Caiman Energy II, had an explosion and fire at its Natrium, WV processing plant/fractionation facility in September (see Explosion/Fire at Blue Racer’s Natrium, WV Processing Plant). Since then, at least two Blue Racer customers have found alternatives to using the Natrium facility: Rex Energy and Atlas Resources. More drillers adversely affected by the facility being offline (some of whom complained about the plant closure last week at the DUG East conference in Pittsburgh) may also be in the hunt for alternatives, especially with the announcement the plant will remain offline until “at least January” of 2014. That’s bad news for drillers and for Blue Racer, although they obviously have to repair the facility and ensure whatever caused the explosion/fire does not happen again.

As part of upgrades at the facility, Blue Racer is installing an emergency siren system in the neighboring community of Kent–to warn them of any problems at the plant. The latest on the closed facility and its prospects for re-opening:

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Natrium, WV Fractionation Plant Still Closed After Explosion/Fire

updateAs MDN previously reported, an explosion and fire was reported at the Blue Racer Midstream’s Natrium, WV natural gas processing plant early Saturday on Sept. 21 (see Explosion/Fire at Blue Racer’s Natrium, WV Processing Plant). It’s a week and a half later and the plant, which both processes or separates wet gas and further fractionates it into its component compounds remains closed while an investigation continues. WV officials and the plant’s owners (Blue Racer is owned by Dominion and Caiman Energy II) still don’t know what caused the explosion and fire.

Meanwhile, at least one Natrium customer has found an alternative source to process their wet gas…
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Blue Racer Gets $1B Line of Credit for More Utica Projects

Blue Racer Midstream, a 50/50 midstream joint venture between Dominion and Caiman Energy II, was formed last December (see Dominion, Caiman in $1.5B Utica JV: Blue Racer Midstream). One of the assets that belongs to the Blue Racer jv is the newly online Natrium, WV NGL plant (see Dominion Sells $500M Natrium NGL Plant to… Itself).

In order to expand and fulfill their vision of becoming the leading midstream company in the Utica Shale, Blue Racer needs money to build things. They now have it. Blue Racer announced yesterday they’ve secured an $800 million line of credit with a group of banks–a line of credit which can be (under certain conditions) expanded to a whopping $1 billion. That kind of money will easily build you another couple of Natrium NGL plants…
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Dominion Sells $500M Natrium NGL Plant to… Itself

Dominion, a huge energy company that does everything from shale drilling to pipelines and processing plants to selling gas and electric as a utility, has just sold the newly built and operating $500 million NGL processing plant in Natrium, WV to…itself. The Natrium plant was due to go online late last year. Then it was forecast be online in the spring of this year. The plant, which separates natural gas liquids from methane in the Marcellus/Utica Shale, finally went online in late June (see Blue Racer Midstream’s Natrium, WV NGL Plant Now Up & Running).

Blue Racer Midstream officially took title to the Natrium plant as of August 9th. Blue Racer is a joint venture between Dominion and Caiman Energy II. Dominion essentially owns Blue Racer, ergo Dominion sold the plant to itself. These things happen on paper–no doubt for more favorable tax and accounting purposes for investors. Dominion’s announcement from yesterday:
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Blue Racer Midstream’s Natrium, WV NGL Plant Now Up & Running

blue racer snakeBlue Racer Midstream, a joint venture between Dominion and Caiman Energy, was supposed to have a new $500 million wet gas (natural gas liquids) processing plant online in Natrium, WV last December (see Dominion $500M NGL Processing Plant in WV to Open in December). The date was then changed to “late spring” (see Natrium, WV NGL Plant Behind Schedule, Will Open “Late Spring”). Blue Racer finally stopped predicting when the plant would open, but MDN told you in late May the signs were there for an “imminent” opening (see Natrium, WV NGL Processing Plant Start-up Close).

Strike up the band! Even though Blue Racer has decided not to make a public announcement, the Akron Beacon Journal is reporting the plant has been up and “quietly” operating for the past several weeks…
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Natrium, WV NGL Processing Plant Start-up Close

Processing plants in the Marcellus and Utica Shale region are a critical component of the drilling picture that frankly is holding up further development right now. Without the ability to separate “wet gas” (gas containing compounds in addition to methane, like ethane, butane, propane and pentane), drillers in wet gas areas are either drilling and capping their wells, or not drilling them in the first place. All eyes are on infrastructure projects like the processing plant in Natrium, WV being built by Blue Racer Midstream, a joint venture between Dominion and Caiman Energy.

The $500 million Natrium plant was due to be finished last December. Then the start-up date was changed to be “late spring” of this year (see Natrium, WV NGL Plant Behind Schedule, Will Open “Late Spring”). It’s almost summer and the plant is still not open. However, the signs point to an imminent start:
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2nd Bomb Threat Stops Construction at Natrium, WV NGL Plant

Just two days ago MDN told you that the Blueracer Midstream natural gas liquids (NGLs) processing plant being built in Natrium, WV is now several months behind schedule and not due to go online until later this spring (see Natrium, WV NGL Plant Behind Schedule, Will Open “Late Spring”). Back in February, the same Natrium plant had a bomb threat that stopped construction and caused an evacuation of 500 workers for several hours (see Bomb Threat at Natrium, WV NGL Plant Doesn’t Slow Construction). At the time, it was thought perhaps the bomb threat did not specifically target the NGL plant because the previous day a bomb threat was called at a different nearby WV Route 2 location, not related to the natural gas industry.

But now? We’re not so sure. Yesterday a second bomb threat was made against the Natirum facility, causing the evacuation of 700 construction workers,  shutting down work for another several hours. The head of the WV Oil and Natural Gas Association is calling it a case of “domestic terrorism” and a crime:

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Natrium, WV NGL Plant Behind Schedule, Will Open “Late Spring”

A $500 million natural gas liquids processing plant in Natrium (Marshall County), WV was supposed to go online by the end of 2012 and didn’t (see Dominion $500M NGL Processing Plant in WV to Open in December). It was then supposed to be online “in a few weeks,” as of the middle of February (see Bomb Threat at Natrium, WV NGL Plant Doesn’t Slow Construction). It’s now the end of March and the facility is still not online. Blue Racer Midstream, the joint venture owner of the plant, is now saying it will go online “later this spring.”

An update on progress at the facility:

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Bomb Threat at Natrium, WV NGL Plant Doesn’t Slow Construction

A $500 million natural gas liquids processing plant in Natrium (Marshall County), WV will go online in the next few weeks—even with a temporary stoppage of construction last Saturday due to a bomb threat (no word on who made the threat or why). The Natrium plant is part of Blue Racer Midstream, a $1.5 billion joint venture between Dominion and Caiman Energy (see Dominion, Caiman in $1.5B Utica JV: Blue Racer Midstream). The new plant was originally scheduled to go online by end of 2012.

Some of the construction for the plant is happening across the border in Belmont County, Ohio:

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Dominion, Caiman in $1.5B Utica JV: Blue Racer Midstream

Two large midstream (pipeline & processing plant) companies, Dominion and Caiman Energy II, announced a new $1.5 billion, 50/50 joint venture to form a new midstream services company to service the Utica Shale in Ohio and Pennsylvania. The name of the new company is Blue Racer Midstream. Sound familiar? It should. Yesterday MDN brought you the news that Williams is investing $380 million in Caiman Energy/Blue Racer (see this MDN story).Williams owns nearly half of Caiman Energy II (47.5%).

One of the core assets of the new Blue Racer Midstream company will be Dominion’s previously announced $500 million natural gas liquids processing plant in Natrium, WV (see this MDN story). The Natrium plant was scheduled to go online by Dec. 31—a deadline that won’t be met. However, work on the new NGL plant continues at a “furious pace” and the plant will be online in early 2013. Dominion’s extensive gathering pipeline system in eastern Ohio is also part of the deal.

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Williams Invests $380M in New Utica Shale Midstream Project

Midstream behemoth Williams announced today it is investing $380 million in the new Blue Racer Midstream venture in the Utica Shale. The investment is part of Williams’ ongoing joint venture with Caiman Energy II (Willams owns 47.5%), which concentrates on developing midstream projects in the Utica Shale region.

Today’s Williams announcement:

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