Marcellus/Utica Helps Lift MPLX/MarkWest Profits in 3Q

MPLX assets (click for larger version)

Back in 2015, MarkWest Energy, one of the premier midstream companies in the Utica that built and operated numerous gas processing plants and pipeline systems, sold itself to Marathon Petroleum (see MarkWest Energy Investors/Unitholders Approve Merger with Marathon). The pipeline subsidiary of Marathon that includes MarkWest is called MPLX. On Monday MPLX released its third-quarter 2020 update showing the Marcellus/Utica region continues to lift the company economically.
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Marathon Petroleum Won’t Sell MarkWest Midstream Subsidiary

Marathon Petroleum, the parent company of MPLX (formerly called MarkWest Energy) announced some big changes last November. Namely, they caved to “activist” investors (we still call them corporate raiders) and their demands to split the company in three and dump the current CEO (see Partial Activist Victory: Marathon to Sell Speedway, CEO Retiring). The one thing the activists didn’t get was a commitment from Marathon to sell off the MarkWest/MPLX division. However, to keep the raiders happy, Marathon did commit to reviewing a sale of MPLX/MarkWest. The review is now done and yesterday Marathon announced not only will they keep MPLX/MarkWest, but the CEO of MPLX is also becoming the CEO of parent Marathon.
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MarkWest Says “Difficult to Forecast” Marcellus/Utica for 2020

Last week MPLX (i.e. MarkWest Energy) issued its 4Q and full-year 2019 financial and operating update, along with guidance on what to expect in 2020. MarkWest (as we call them, old habits die hard) has major operations in the Utica and Marcellus–via gathering pipelines and processing plants. MarkWest reports “significant year-over-year growth” in the M-U region, but predicts a slowdown in that growth in 2020.
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MarkWest Gets New CEO, New Processing Plants Coming in M-U

Last week Marathon Petroleum, the parent company of MPLX (formerly called MarkWest Energy) announced some big changes during their third quarter update. Namely, they have caved to “activist” investors (we still call them corporate raiders) and their demands to split the company and dump the current CEO (see Partial Activist Victory: Marathon to Sell Speedway, CEO Retiring). The one thing activists didn’t get was a commitment to sell off the MarkWest/MPLX division. What we overlooked at the time (correcting it now) is the fairly big news that the MPLX division got a new CEO, and they continue to build new natural gas and NGL processing plants in the Marcellus/Utica region.
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Partial Activist Victory: Marathon to Sell Speedway, CEO Retiring

As MDN reported in early October, 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 called 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 politely but firmly told Elliott, Shaw, et al to, in essence, buzz off (see Marathon/MarkWest Tells Activist Investor Co. Will Not Split). Looks like someone has to eat their words.
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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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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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Range Resources 2Q – Production Up 10% Despite MarkWest Outage

Production for Range Resources was up a healthy 10% year over year in second quarter 2019, according to Range’s 2Q19 update issued late last week. Range produced 2.3 billion cubic feet equivalent per day (Bcfe/d) in 2Q. For the first half of the year Range brought online 39 Marcellus/Utica wells and plans to bring online another 49 wells in the second half of 2019. The company is on track to spend roughly $750 million on drilling in 2019.
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MarkWest, Contractor Fined $98K for SWPA Gas Plant Explosion

In mid-December there was an explosion at a MarkWest Energy natural gas processing plant in Chartiers (Washington County), PA, injuring four people (see MarkWest Plant Explosion in Washington Co. Injures 4; 1 Critical). Unfortunately one the workers later died (see Sad Postscript: Man Dies of Injuries from MarkWest SWPA Explosion). The Occupational Safety and Health Administration (OSHA) investigated the incident and has just fined MarkWest and a contractor (that employed the workers) a cumulative $98,508.
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MarkWest Hopedale Plant Problem Knocks 2 Bcf/d Offline in OH, WV

A pipeline feeding the MarkWest Hopedale Fractionation Facility in Jewett, Ohio was knocked offline last Sunday, and that outage caused a cascading effect throughout the region that forced three gas processing plants in West Virginia to temporarily scale back (or stop) operations, which further caused a ~2.1 billion cubic feet per day (Bcf/d) decrease in gas flows on two interstate gas transmission pipelines. The good news is that the problem is now resolved.
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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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