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Midstream Bombshell: MarkWest Sells Itself to Marathon Petroleum

bigger fish smaller fishWhile all eyes have been on the possible hostile takeover of midstream giant Williams by another midstream giant, Energy Transfer Equity (see Williams Continues to Resist ET Offer, Talks with Other Suitors), another midstream (i.e. pipeline company) merger was quietly being arranged that has rocked the midstream world. Yesterday MarkWest Energy, with major operations in the Marcellus/Utica–MDN would call it the premier midstream company in the northeast–announced it is selling itself to Marathon Petroleum Corp.’s midstream division MPLX, a master limited partnership or MLP. The “merger” (i.e. sale of MarkWest to Marathon) will create the fourth largest MLP in the United States–worth $21 billion in market capitalization. MarkWest is twice the size of MPLX, which makes this an interesting story and truly big news for the Marcellus/Utica…
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Utica Crude Oil Barged Down Ohio River to Marathon Plant in KY

This one kind of slipped by our radar. Marathon Petroleum, the nation’s fourth largest refiner (headquartered in Findlay, OH), has just brought online a new $170 million condensate splitter at its refinery complex south of Catlettsburg, Kentucky. The purpose of the new splitter, which took two years to build, is to process sweet crude oil being produced in the Utica Shale of Ohio, Pennsylvania and West Virginia. And how, you may ask, is all that Utica crude getting to the facility? By barge, along the Ohio River…
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Marathon Utica Wet Gas Pipeline Extends Open Season Extra 30 Days

In December 2013 Marathon Petroleum, Ohio’s largest refiner, announced they would build a new Utica Shale pipeline, called Cornerstone (see Marathon Petroleum’s Newly Announced “Cornerstone” Utica Pipeline). Cornerstone will stretch nearly 50 miles from the MarkWest cryogenic processing plant in Cadiz, OH, heading northwest and connecting to M3’s fractionator plant in Scio and M3’s cryogenic processing plant in Leesville on its way to connecting with and terminating at Marathon’s refinery in Canton, OH. The pipeline will flow crude oil, condensate and natural gasoline. In February, Marathon launched an open season to sign up shippers for the new pipeline (see Marathon Announces Open Season on New Wet Gas Pipelines). The open season was due to end on March 13, but Marathon has extended it an extra month–a sign that there may not be as much interest as originally thought for this project (although Marathon says the extra time allows them to handle “significant interest” in the project)…
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Marathon Announces Open Season on New Wet Gas Pipelines

Marathon Pipe Line and Ohio River Pipeline, both subsidiaries of Marathon Petroleum Corp., announced binding open seasons on two new pipeline projects in Ohio and beyond. The first is called Cornerstone Pipeline is a 16-inch pipeline for condensate, natural gasoline, diluent and butaine (NGLs) that will begin in Harrison County, OH and run for about 50 miles to Marathon’s refinery in Canton, OH. Along the way it has the potential to connect various processing facilities. The second project is something they’re calling the Utica Build-Out Projects–a pipeline or pipelines that will carry product beyond Canton to other Midwest refineries, reaching Chicago and even into Canada…
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Marathon Petroleum’s Newly Announced “Cornerstone” Utica Pipeline

MPC Cornerstone PipelineAnother new pipeline is on the way in the Utica Shale. This one will be built by Marathon Petroleum Corporation, the largest refiner in the Utica Shale region. The Cornerstone pipeline, as they’re calling it, will stretch 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 (see map below). The pipeline will carry, at various times, crude oil, condensate and natural gasoline.

The Cornerstone pipeline is slated to be built and in operation in 2016, according to Marathon officials. Here’s what Garry Peiffer, President of Marathon’s Master Limited Partnership MPLX GP said about the Cornerstone project on an analyst call yesterday:
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Columbiana Port Authority Close to Final Deal with Marathon

Back in July MDN told you about a deal the Columbiana County Port Authority hoped to do with Marathon Petroleum to sell Marathon 3.6 acres in along the riverfront in Wellsville, OH so they can build a transfer station (truck terminal) to accept natural gas liquids and oil from local shale drilling by truck and, load it onto barges which would then float downriver for refining (see Columbiana Port Authority Helps Shale Industry).

Two actions taken on Monday by the Port Authority significantly advanced the ball down the field toward making the deal a reality:

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Columbiana Port Authority Helps Shale Industry

The Columbiana County (OH) Port Authority on Monday passed a measure stating they intend to sell 3.6 acres in Wellsville, OH to Marathon Petroleum for $2.4 million. The property is part of the Port Authority’s riverfront industrial park and sits adjacent to Marathon’s storage tank/transfer facility. Marathon will use the property for trucks transporting oil and gas produced from local shale drilling.

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