More MarkWest Construction Under Way in Doddridge County, WV

MarkWest Energy – Sherwood Complex

MarkWest Energy’s Sherwood Complex in Doddridge County, WV has been in operation since 2012. Since that time, MarkWest has built and currently operates nine processing plants at the complex, capable of separating methane from NGLs. The plant continues to grow. MarkWest is currently building another two processing plants at the Sherwood Complex, to be done and in operation this year. And if that isn’t enough, MarkWest says there is potential to build another six (!) processing plants at Sherwood. As we previously noted, Sherwood is right now the fourth largest gas processing plant in the U.S., and by the end of this year, it will be number one (see MarkWest Building 6 New Processing Plants, 3 Fractionators in 2018). One of the primary reasons for the rapid expansion at Sherwood is Antero Resources, which uses the Sherwood operation to service its vast WV drilling program. Needless to say, the ever-expanding Sherwood facility is a huge blessing, economically, to Doddridge County. Here’s a deep dive into future plans for Sherwood, and how the plant benefits the local community…
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1Q18 Midstream Potpourri: Williams, MarkWest, Summit, Tallgrass

Every three months publicly traded companies, including those with major operations in the Marcellus/Utica, issue a required quarterly update for stockholders. It’s often referred to as “earnings season.” We like to cull through the updates to share items of interest with MDN readers. For drilling companies we dedicate an entire post to each company. We typically don’t cover midstream (i.e. pipeline) companies as much. However, there are a number of important projects cooking with companies like Williams, MarkWest Energy (MPLX), Summit Midstream and Tallgrass (REX Pipeline). We culled through the press releases and analyst phone call transcripts to pick out comments and portions that we think are helpful in understanding where some of these important projects are, and how they impact the bottom line of said companies. Below is our 1Q18 midstream potpourri…
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PA Court Tells SWPA Town Can’t Restrict MarkWest Compressor Stn

Cecil Township

Cecil Township (Washington County, PA) is one of the original seven selfish towns that sued Pennsylvania over the 2012 Act 13 oil and gas law, a law that replaced a mishmash of local zoning ordinances governing oil and gas activity with one uniform, and fair, set of state regulations. Cecil and the other selfish towns won their case on appeal with the PA Supreme Court (see PA Supreme Court Rules Against State/Drillers in Act 13 Case). Although Cecil (and other towns) have been zealous in using their authority to zone out drilling and pipeline activity, sometimes they go too far, as Cecil has done. The PA Commonwealth Court ruled last Friday that Cecil exceeded their authority by “imposing a slew of conditions” (26 conditions!) on a proposed MarkWest Energy compressor station planned for the municipality, a plant first proposed back in 2010…
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MarkWest Building New Fractionation Plant in Harrison County, OH

Hopedale Fractionation Facility (click for larger version)

MarkWest Energy, now a subsidiary of Marathon Petroleum (MPLX unit) is THE premier shale gas processor in the Marcellus/Utica region. When natural gas comes out of the ground, a bunch of other hydrocarbons come out of the ground with it–namely NGLs (natural gas liquids). NGLs include compounds like ethane (C2H6), propane (C3H8), butane (C4H10), isobutane (also C4H10), and pentane (C5H12). MarkWest’s cryogenic processing plants separate out the methane from NGLs. A different process, called fractionation, further separates the NGLs into their component parts. MarkWest handles an estimated 60% of all fractionation in the M-U. MarkWest has standalone plants set up to separate out ethane–called C2 fractionation because ethane has two carbon atoms. Ethane fractionation plants are their own separate beast–removing ethane from the NGL stream. Finally, there are C3 fractionation plants, which tackle separating the other NGLs–propane, butane, isobutane and pentane (referred to as C3+ fractionation because each of those compounds has three or more carbon atoms). In the Hopedale fractionation operation (Jewett, Ohio), MarkWest already has three C3+ fractionation plants up and running–Hopedale I, II, and III. Each one processes 60,000 barrels of NGLs a day, for a cumulative 180,000 bbl/d capacity. Honeywell issued a press release yesterday to say they have been tapped to build a fourth Hopedale C3+ fractionation plant, expanding MarkWest’s capacity by another 60,000 bbl/d. Honeywell says it takes just 40 weeks from start to finish and they will have the Hopedale IV plant up and running, by the end of this year…
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MPLX 2017 Results: Income Up Astounding 241%, Adding 6 Plants

MPLX, which used to be known as MarkWest Energy prior to selling itself to Marathon Petroleum, issued its fourth quarter 2017 update yesterday. And wow, what an update! MarkWest…OK, MPLX (old habits die hard)…is the Marcellus/Utica region’s leading gas processing company. MPLX’s facilities process on the order of 60% of all the gas produced in the Marcellus/Utica. The region produced record volumes of gas in 4Q17 (and indeed for all of 2017), which in turn led to record volumes of gas processed (separating the methane from the other hydrocarbons), and record volumes of fractionation (separating the other hydrocarbons into their respective components) for MPLX. Net income soared, both for the fourth quarter and full year. In 4Q17, MPLX’s net income was $238 million, up from $133 million in 4Q16–a 79% increase. For the entire year, MPLX’s net income was $794 million, vs. $233 million in 2016. That a 241% increase year over year! Yeah, the Marcellus/Utica came back big time in 2017. But MPLX isn’t sitting around basking in the glow of success–they have big plans for 2018. In the Marcellus/Utica, MPLX will add six new gas processing plants, increasing the company’s processing capacity by 21% to over 7 billion cubic feet per day. Additionally, MPLX expects to add 40,000 barrels per day of ethane fractionation capacity, and 60,000 barrels per day of propane-plus fractionation. Below is the full update along with the latest PowerPoint presentation…
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New MarkWest Processing Plant Approved by Smith Twp in SWPA

Smith Township, Washington, PA

In August MarkWest Energy (now part of MPLX) briefed Smith Township (Washington County, PA) officials on plans to build a new natural gas processing plant (see Update on MarkWest Processing Plant Proposal for Smith Twp). The project was first introduced last fall, but then went quiet until May of this year. MarkWest plans to initially building one cryogenic plant and one de-ethanizer at what it calls the Harmon Creek Complex. Eventually MarkWest wants to build four cryogenic plants and two de-ethanizers at complex. Smith officials understandably had questions and wanted certain things in writing before they would consider issuing a “conditional use” permit for the project. Apparently the questions got answered. On Monday, Smith supervisors voted 3-0 to approve the project. However, the backhoes are not firing up just yet. Before the project can get built, the PA Dept. of Environmental Protection must issue an air permit (GP-5) for the project. Anti fossil fuelers were not happy with Smith’s approval, claiming MarkWest has been hiding the full scope of the project…
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Update on MarkWest Processing Plant Proposal for Smith Twp

MarkWest facilities – click for larger version

The MarkWest Harmon Creek Complex planned for Washington County, PA continues to make progress. Last fall NGI’s Shale Daily reported that MarkWest planned to build a new processing plant to process natural gas for Range Resources (see MarkWest Building New Processing Plant in Washington County, PA). But following the initial announcement, all went quiet and the project went on “indefinite hold.” In May of this year, the project restarted when MarkWest officials attended a Smith Township planning commission meeting (the town where it will get built) to discuss the project (see MarkWest’s Washington, PA Processing Plant Plans Reactivated). According to MarkWest, plans call for initially building one cryogenic plant and one de-ethanizer. Eventually MarkWest wants to build four cryogenic plants and two de-ethanizers at the Harmon Creek Complex. MarkWest reps were back before Smith Township supervisors on August 2nd to discuss more about their plans. The town must grant a “conditional use” permit before the project can get built. Before that happens, the town wants certain things in writing…
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MPLX/MarkWest 2Q17: Utica Descending, Marcellus Ascending

MPLX, which is the midstream subsidiary of Marathon Petroleum (essentially MarkWest renamed, since the merger), issued its second quarter 2017 update last week–and wow what an update! MPLX’s profit in 2Q17 is up 10x from 2Q16–to $190 million. Revenue is up 31% in 2Q17 from a year earlier–to $916 million. It pays to be in the midstream. The company processed 4.7 billion cubic feet per day (Bcf/d) of Marcellus/Utica gas and liquids, which is up 14% over the same period last year. Just one more bit of evidence that the industry is picking up again. This past quarter MPLX started up a 20,000-barrels-per-day fractionation train (de-ethanization) at the Bluestone complex (in Butler County, PA) in June to support growing natural gas liquids (NGL) production in the Marcellus shale. However, not all areas were up equally. Of particular note, MPLX saw a decrease in processing volumes in the Utica, and an increase in the Marcellus. On the conference call, MPLX CFO Pam Beall said right now the Utica is their “weak spot” because some producers are shifting their spending away from some areas in the Utica–spending more in other areas, including the Marcellus. However, MPLX president Mike Hennigan believes the Utica “weakness” is temporary and will pick up again. Below are excerpts from last week’s conference call, the full 2Q17 MPLX update, and the slide deck used on the conference call…
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3 MarkWest Utica “Build-Out” Pipeline Projects Now Up & Running

In February MDN reported that Marathon Petroleum had begun to build a 49-mile condensate pipeline, called HALI–the Harpster to Lima Pipeline (see Marathon Begins to Build New 49-Mile Utica Pipeline in Ohio). The purpose of the project is a pipeline “for efficient and safe delivery of condensate from the Utica Shale to refineries where it can be processed into gasoline and diesel in order to meet the needs of producers, mid-streamers, marketers, diluent blenders, and refiners as the Utica Shale continues to develop.” At the time, the pipeline was expected to go online in July–this month. It beat the clock and went live last month (see Marathon Completes 49-Mile Utica Condensate Pipeline in Ohio). MarkWest, now owned by Marathon, issued an announcement yesterday to point out not only is HALI now up and running, but so too are two other liquids pipelines that MarkWest worked to expand: East Sparta to Heath, and Heath to Harpster. Together the three pipelines are moving liquids to refineries throughout the Midwest. Marathon is also working on a project to extend their service for diluents to western Canada…
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Marathon Completes 49-Mile Utica Condensate Pipeline in Ohio

Click map for larger version – Harpster & Lima in the center

In February MDN reported that Marathon Petroleum had begun to build a 49-mile condensate pipeline, called HALI–the Harpster to Lima Pipeline (see Marathon Begins to Build New 49-Mile Utica Pipeline in Ohio). The purpose of the project is a pipeline “for efficient and safe delivery of condensate from the Utica Shale to refineries where it can be processed into gasoline and diesel in order to meet the needs of producers, mid-streamers, marketers, diluent blenders, and refiners as the Utica Shale continues to develop.” At the time, the pipeline was expected to go online in July. It’s not quite July, but the good news is that the pipeline is now online and delivering…
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Sunoco LP CEO Mike Hennigan Defects to MPLX/MarkWest Energy

Michael Hennigan

Mike Hennigan was, until late last year, president and CEO of Sunoco Logistics Partners–builder of the Mariner East pipeline projects and operator of the Marcus Hook refinery near Philadelphia. Sunoco LP has (for years) been a subsidiary of Energy Transfer (ET). Last November, ET announced it was combining two subsidiaries together into one operation–Sunoco LP and Energy Transfer Partners (see ETE Merging Sunoco Logistics and Energy Transfer Partners). Although on paper Sunoco LP swallowed ETP, the new entity retained the ETP name and ETP’s top management. Exactly how Mike fit into the new arrangement we’re not sure. We know his title became president for crude, liquids and refined products. We’re guessing Mike’s new role wasn’t as satisfying as the old role, because he’s jumping ship. Mike is leaving ET and moving to Marathon Petroleum, to become president of subsidiary MPLX. You may recall that MPLX is Marathon’s pipeline subsidiary which, in late 2015, bought out and merged in MarkWest Energy–a huge Marcellus/Utica player in the midstream space (see MarkWest Energy Investors/Unitholders Approve Merger with Marathon). So, in a nutshell, Mike Hennigan is leaving Sunoco LP to become the new head of MarkWest Energy…
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Marathon 2016 Revenue Slips, Spending $1.3B on Marcellus in 2017

Marathon Petroleum, the refiner and midstream company based in Ohio (owner of what used to be MarkWest Energy) reported their fourth quarter and full year 2016 numbers yesterday. Overall revenue was down a bit, from $2.85 billion in 2015 to $2.21 billion in 2016 due to “a challenging commodity price and margin environment.” However, Speedway gas station/convenience stores (many of which used to be Hess gas stations) had “exceptional performance” and “set multiple records for the full-year 2016.” Of particular note for MDN, Marathon plans to spend $1-$1.3 billion in 2017 on new infrastructure projects in the Marcellus region. Good news indeed! Below we have yesterday’s update, along with a PowerPoint presentation Marathon used at the recent Marcellus-Utica Midstream event in Pittsburgh. We love the slides in that presentation, full of useful information…
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Marathon Begins to Build New 49-Mile Utica Pipeline in Ohio

In December 2013 MDN first reported a new $250 million pipeline on the way in the Utica Shale from Marathon Petroleum Corporation, the largest refiner in the Utica Shale region (see Marathon Petroleum’s Newly Announced “Cornerstone” Utica Pipeline). The Cornerstone pipeline stretches nearly 50 miles from the MarkWest cryogenic processing plant in Cadiz, OH northwest connecting to M3’s fractionator plant in Scio and M3’s cryogenic processing plant in Leesville along the way as it terminates and connects to Marathon’s refinery in Canton, OH. The pipeline will carry, at various times, crude oil, condensate and natural gasoline. It went online in September 2016 (see Utica Condensate Begins Flowing Through Cornerstone Pipeline). What we didn’t know/hadn’t noticed with all the talk and focus on Cornerstone, is that Marathon had also floated another 49-mile condensate pipeline project further west of Cornerstone, called HALI–the Harpster to Lima Pipeline. The purpose of the project is a pipeline “for efficient and safe delivery of condensate from the Utica Shale to refineries where it can be processed into gasoline and diesel in order to meet the needs of producers, mid-streamers, marketers, diluent blenders, and refiners as the Utica Shale continues to develop.” The project is now under construction and expected to go online in July. Although Marathon doesn’t really provide any details for the project on their website, we were able to locate a good bit of information about the project, which we share below…
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Marathon Dances to Corp Raider’s Tune, Former CEO Dissents

We always find it distressing when companies begin to tap dance to please corporate raiders. That is apparently what is now happening at Marathon Petroleum, owner of MarkWest Energy. We don’t pretend to fully understand what’s happening (this is all high finance stuff), but our impression is that Marathon is “dropping down” certain assets (i.e. moved from one legal corporate entity to another) more quickly than it otherwise would have, due to pressure on the company from Elliott Management, a so-called activist investor in the company. “Activist investor” is what used to be called “corporate raider” 25 years ago, which are companies or people who invest just enough in a company to control it, forcing the company to shed assets and fire people in order to boost the stock price–just to turn around and sell and make a quick buck. Apparently Elliott wants Marathon to a) move assets around from one company to another PDQ, and b) consider spinning out Speedway into its own company, or selling it. Speedway, you may or may not know, is Marathon’s retail gas filling station business. Speedway bought out and merged in the old Hess filling stations (see Marathon Petroleum Buys the Hess Truck! What Will We Do for Xmas?). Former MarkWest Energy CEO John Fox is none too happy about these machinations. Fox owns a bunch of Marathon stock and he issued a press release yesterday to pressure Marathon’s current leaders into slowing down and not being so eager to tap dance to Elliott’s tune…
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Corp Raider Pressures Marathon to Split Itself into 3 Companies

1017_1Not even a year go–in December of last year–one of the biggest and brightest stars in the midstream firmament for the Marcellus/Utica, MarkWest Energy, sold itself to Marathon Petroleum (see MarkWest Energy Investors/Unitholders Approve Merger with Marathon). We wondered at the wisdom of such a move, but who are we? What’s done is done. Ironically, an “activist investor” hedge fund (i.e. corporate raider) by the name of Elliott Management yesterday disclosed to the world that they have taken a 4% stake in Marathon. Corporate raiders target companies they can bully by buying enough shares to force those companies to fire people and sell assets. It “unlocks value for shareholders” you see–meaning it will boost the per share price of the raider’s stock so they can turn around and sell that stock and line their already-fat pockets. Disgusting. True to form, Elliott is targeting Marathon. They sent a letter to the Marathon board with the “suggestion” that the company split itself (after buying MarkWest less than a year ago) into three separate companies (retail, refining, midstream) in an effort to “unlock $14 – $19 billion for shareholders.” Unfortunately there are at least two other raiders lurking in the background with small stakes in Marathon who may join Elliott to pressure Marathon…
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Marathon Petroleum 3Q16: Profit Triples to $141M Thx to M-U

mplxMPLX, Marathon Petroleum Corp.’s fuels processing, transportation and logistics subsidiary, issued its third quarter 2016 update yesterday. MPLX reported that profits more than tripled, to $141 million, in 3Q16. MPLX is the owner of MarkWest Energy after buying them out late last year. One of the keys to MPLX’s increase in profits? Yep–the Marcellus/Utica. On an analyst phone call yesterday, MPLX’s president Don Templin said: “While other basins are in decline the Marcellus and Utica rich gas volumes continue to grow. For 2016 we continue to expect processed volumes to increase by approximately 15% year-over-year and gathered volumes to increase by approximately 20%. And in 2017, we expect an additional 10% to 15% increase in processed volumes compared to 2016.” Here’s the MPLX 3Q16 update…
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