Marathon/MarkWest Tells Activist Investor Co. Will Not Split

As MDN reported two weeks ago, so-called “activist investors” Elliott Management and D.E. Shaw want Marathon Petroleum (parent of MPLX, otherwise known as MarkWest Energy) to split itself into three separate companies, and a couple of other large shareholders are calling for Marathon CEO Gary Heminger to be fired (see Major Investors Pressure Marathon Petroleum to Split into 3 Cos.). Heminger and board member Greg Goff have just politely, but firmly, told Elliott, Shaw, et al to “buzz off” (our words). Heminger is going to fight the effort to split the company and dump him.
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Major Investors Pressure Marathon Petroleum to Split into 3 Cos.

Here we go again. “Activist investor” Elliott Management is pressuring Marathon Petroleum to split itself up into three companies–retail (Speedway convenience store chain), refining, and midstream (or MarkWest Energy). Recall that Marathon bought out and merged in MarkWest just a few years ago, in December 2015 (see MarkWest Energy Investors/Unitholders Approve Merger with Marathon). Now Elliott wants the company carved up to “unlock value.” Two other large shareholders either want the company split up and/or Marathon CEO Gary Heminger gone–now.
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MarkWest Continues to Expand NGL Infrastructure in the Wet M-U

Our friends at RBN Energy recently launched a new mini-series of blog posts delving into Marcellus/Utica gas processing and fractionation in the wet gas region–meaning southwest PA, eastern OH, and the northern panhandle of WV. We previously brought you part 1 of that series (see Overview of Gas Processing & Fractionation in M-U Wet Gas Region). Today we have part 2, which takes a close look at MPLX (i.e. MarkWest Energy) and the key role their processing plants play in allowing NGL production in the M-U to continue growing.
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Top Energy CEOs Skate on Thin Ice by Turning Against Shareholders

If Jeff Bezos (Amazon CEO) and Tim Cook (Apple CEO) jump off a cliff, should you, as CEO of an energy company, jump off too? The CEOs of ExxonMobil, Chevron, Marathon Petroleum and several other big oil and gas companies have just answered that question in the affirmative. Splat. Perhaps they were caught up in the euphoria of the moment. Perhaps they were shamed. (A new disorder for the DSM V: “CEO shaming.”) For whatever reason, a group of CEOs from some of the largest U.S. companies now say the people who buy their company’s stock and fund them via infusions of investment capital are no longer the #1 priority for their companies. We wonder what investors in those companies think. Have they had a change of heart? “Here, take my money and pee it away with no returns. Please! I don’t need this money any more.” Hey Jeff and Tim, we have a bridge in Brooklyn we’d like to sell ya…
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MPLX M-U Processing, Fractionation Plants Coming Online Soon

MPLX, formerly known as MarkWest Energy, recently released their second quarter 2019 update. There seems to be a new emphasis for MPLX on the Texas Permian play, which is detectable in the update. However, much of the company’s revenue continues to come from our region. A slide embedded deep in the Appendix of the latest slide deck tells an interesting story for us: Of the ten processing and fractionation plants MPLX is currently building or planning to build, six of them are in the Marcellus/Utica region. We have the list below.
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MPLX VP Says We Need NGL Storage, and We Need it NOW

Some interesting comments by Jim Crews, vice president of northeast business development for MPLX (formerly known as MarkWest Energy), during a presentation he gave at the Independent Oil and Gas Association of West Virginia’s (IOGAWV) Summer Meeting last week. Crews said lack of natural gas liquids storage is a crisis (our words, reflecting his sentiment). And we need storage not only here in the Marcellus/Utica region–but across the country. “We’re out of storage,” he said, and “Cargoes are just being given away.”
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MarkWest Gathered & Processed Volumes Thru the Roof in 1Q19

MarkWest Energy, now part of MPLX (Marathon Petroleum) operates the nation’s largest cryogenic gas processing plant operation in the country, the Sherwood Complex, in West Virginia (see Nation’s Biggest NatGas Processing Plant (in WV) Getting Bigger). MarkWest/MPLX released its quarterly update yesterday. The company has grown, a lot, with operations in multiple regions of the country. Our interest is, of course, the Marcellus/Utica. Gathered volumes in the M-U averaged 3.4 billion cubic feet per day (Bcf/d) in 1Q19, up a huge 26% versus 1Q18. Processed volumes averaged 6.0 Bcf/d, an 18% increase over 1Q18 thanks to expanded volumes from the Sherwood (in Doddridge County, WV) and Harmon Creek (in Washington County, PA) processing plants.
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Nation’s Biggest NatGas Processing Plant (in WV) Getting Bigger

MarkWest Sherwood Complex

MarkWest Energy, now part of MPLX (Marathon Petroleum) operates the nation’s largest cryogenic gas processing plant operation in the country–in West Virginia. The Sherwood Complex in Doddridge County, WV has the capacity to process up to 2.2 billion cubic feet per day (Bcf/d) of natgas, along with fractionation (separating out ethane) of up to 60,000 barrels per day (bpd). This year the facility will expand.
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Pittsburgh Panel Discusses Importance of NGL Storage

Seems like every few months there’s a meeting or conference somewhere in the Marcellus/Utica region that addresses the topic of ethane storage. Another such a meeting was held in Pittsburgh yesterday. The meeting was preparatory for the upcoming Northeast Petrochemical Exhibition and Conference to be held June 20-21 in Pittsburgh (must attend event!). As with other meetings like it, several NGL storage options were discussed.
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Marathon Considers Building NGL Storage Hub in Harrison County, OH

Some major news coming from yesterday’s Utica Midstream conference held in North Canton, Ohio. A rep from Marathon Petroleum (which is based in Ohio) told conference attendees his company is contemplating building an underground NGL storage facility in Harrison County, OH–to store ethane, butane and propane.
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MarkWest Energy’s “Extraordinary Results” in 2018

The company we call MarkWest Energy is technically MPLX, renamed after MarkWest was bought out and merged into Marathon Petroleum in December 2015 (see Golden Parachutes Pop Open for MarkWest Top Management/Board). We still call it MarkWest because most people we know still call it that. It’s been over a month since MPLX/MarkWest issued its 2018 update, but we’d still like to analyze it. The company had a breakout year, earning more in 2018 than at any time in the company’s history.
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MarkWest Plant Explosion in Washington Co. Injures 4; 1 Critical

An explosion and fire last night around 6 pm at the MarkWest Energy natural gas processing plant in Chartiers (Washington County), PA sent four people to the hospital–carried there by helicopter. All of them remain hospitalized, and one of them is, sadly, in critical condition. The explosion happened near “two temporary tanks that were onsite for routine maintenance,” according to a MarkWest statement. The tanks hold, “liquid ethylene glycol plus hydrocarbons”–used to clean incoming raw natural gas. The PA Dept. of Environmental Protection is on location today to determine what happened and why–and to ensure there have been no negative impacts to the environment.
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MarkWest 3Q18: Gathered Volumes and Profits Soar, M-U Expanding

Last week MPLX (i.e. MarkWest Energy) issued its third quarter 2018 update. MarkWest, since merging into Marathon Petroleum, has become a big, major player in a number of shale plays across the country. Our interest and focus is, of course, on the Marcellus/Utica. Did this recent update yield any interesting insights? It sure did! Gathered and processed volumes in the Marcellus/Utica are up, significantly, for MarkWest. The amount of gas (and NGLs) gathered in the M-U was up a huge 35% from the same period last year (3.1 Bcf/d), and processed volumes at MarkWest plants was up 10% year over year (5.5 Bcf/d). Here’s a look behind the curtain at MarkWest/MPLX.
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MarkWest/MPLX Floats $2.25B of Unsecured IOUs

From time to time we read about, and bring you news about, companies in our industry floating “notes”–what we call IOUs–a form of debt used to finance new spending or (in this case) refinance and pay off older debt. We’re not high finance experts, but it always looks to us like an elaborate shell game of robbing Peter to pay Paul. Just kick the debt can on down the road. But so many companies do it, there’s obviously some advantage. The latest, and biggest by far we’ve seen, is MPLX (MarkWest Energy). They just announced they are floating a whopping $2.25 billion of “unsecured senior notes.” MPLX will use $750 million of it to pay off older notes, and the rest to repay loans borrowed under the company’s revolving credit facility, and repay loans made to parent company Marathon Petroleum.
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MPLX $7M Fine/Settlement: Fix Air Pollution in PA-WV-OH-KY-TX-OK

MPLX, i.e. MarkWest Energy, has been slapped pretty hard by the federal Environmental Protection Agency, Pennsylvania Dept. of Environmental Protection, and several other state environmental agencies. Last Thursday the federal EPA serving as lead agency, announced a settlement with MPLX (and its various subsidiaries) to pay nearly $7 million in fines and corrective actions to cut down on air emissions at 21 of its plants in Pennsylvania, Ohio, West Virginia, Kentucky, Texas and Oklahoma. Of that total, $925,000 is a fine or “penalty” for violating clean air laws at the plants. The rest of the money will be spent on corrective actions to fix things and cut down on air emissions.
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MarkWest Plans to Build New Marcellus/Utica NGL Pipeline

Yesterday MarkWest Liberty NGL Pipeline, a subsidiary/part of MarkWest Energy (now MPLX since being bought out and merged into Marathon Petroleum in late 2015), announced plans to build a new NGL pipeline. MarkWest Liberty launched a binding open season for the new pipeline–a time when drillers can sign on the dotted line to reserve capacity along the new pipeline. The new NGL pipeline is a bit different than other NGL pipelines in the Marcellus/Utica. It will pick up NGLs from several of MarkWest’s gas processing plants in Pennsylvania and West Virginia, and cart the NGLs to fractionation facilities owned by MarkWest in PA and Ohio, where those NGLs will get separated into their discrete hydrocarbon components. Let us explain it this way: Step One is that the gas comes out of the ground. But it’s not all just methane–there’s a number of other hydrocarbons (natural gas liquids, or NGLs) mixed in with it, things like ethane, butane, propane, pentane. The raw mix goes to a cryogenic processing plant where the methane (i.e. natural gas) is separated out and sent on its way to market via pipelines like Rover and Rockies Express and others. Step Two: The NGLs need further separating. That’s what a fractionation plant does. This new pipeline from MarkWest Liberty (the Marcellus unit of MarkWest) will cart the mixed bag of NGLs to fractionation facilities. After being separated into component parts, the components can then be sold. Which fits with MarkWest’s prior statements that in 2018 they would focus on creating new markets for Marcellus/Utica NGLs, butane in particular (see MarkWest Building 6 New Processing Plants, 3 Fractionators in 2018). So, which processing plants will the pipeline connect to, and which fractionation plants? The announcement does not say, and there is no PDF document available with the details, at least not publicly. For that, you need to contact MarkWest directly. We do, however, have a map of MarkWest’s facilities…
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