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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How MarkWest Gets Marcellus/Utica NGLs to Market

The Marcellus and Utica Shale layers in Southwestern Pennsylvania, northern West Virginia and eastern Ohio produce a boatload of NGLs–natural gas liquids. One company had the foresight to plan a strategy to separate, transport and sell those NGLs. That company was MarkWest Energy, now known as MPLX following a purchase by/merger into Marathon Petroleum. MarkWest’s plan is firing on all cylinders. The experts at RBN Energy have analyzed MarkWest’s initial strategy, now largely complete, and their long-term strategy, still in the works, to give us a great snapshot of how NGLs are moving from our region to Midwestern and Canadian markets…
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MarkWest Grows Marcellus/Utica Gathered Volume 46% in 2Q18

MarkWest Energy, now part of Marathon Petroleum, is the premier midstream company in Ohio and West Virginia. Yesterday MarkWest issued its second quarter 2018 update. MarkWest reported record income of $453 million compared with $190 million in the second quarter of 2017. Put another way, MarkWest made close to half a billion dollars in profit! What about MarkWest’s operations in the Marcellus/Utica region? There was “solid growth” during the quarter. Gathered volumes averaged 2.8 billion cubic feet per day (Bcf/d) for the quarter, a 46% increase versus 2Q17. The increase came mostly from higher Utica dry-gas volumes. Processed volumes averaged 5.2 Bcf/d, a 10% increase versus 2Q17 due in large part to bringing online the Sherwood 9 and Houston 1 plants…
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MarkWest to Remediate 2016 WV Mobley Plant Chemical Spill

In February 2016 there was an accidental release of a hazardous chemical at the MarkWest Energy cryogenic processing plant in Mobley (Wetzel County), WV (see MarkWest’s Mobley Processing Plant Spills Hazardous Oil into Creek). The fluid in question is DOWTHERM™ MX Heat Transfer Fluid, a chemical used as as a heat transfer fluid meant for closed-loop systems. An estimated 3,000 gallons of the fluid spilled, some of it reaching the North Fork of Fishing Creek and some of that entered the water intake for the community of Pine Grove, WV. However, the plant (Pine Grove Water Works) was closed before any of the water was used by local residents–so there was no health threat. A month later MarkWest reported they were done cleaning up the spill and the Pine Grove Water Works was back up and running (see MarkWest Hazardous Spill at Mobley Plant Now Cleaned Up). We thought that was the end of it, but alas, it was not. The Office of Environmental Remediation (OER) at the WV Dept. of Environmental Protection (WVDEP) reports it has just accepted a “Voluntary Remediation Program” application submitted by MarkWest to address ongoing environmental conditions at the Mobley Plant related to the Feb. 2016 spill. The plan will look at current and future uses of the site and determine how best to prevent migration of anything leftover from the spill…
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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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MarkWest Energy Settles EPA Air Pollution Case for $5.6 Million

NOTE: A previous version of this post reported a total price of $3.2 million, now changed to account for the addition of an extra $2.4M for required SEPs. See below.

Two MarkWest Energy subsidiaries, MarkWest Liberty Midstream Resources and Ohio Gathering Co., have been forced into signing a settlement of claims brought by the U.S. Dept. of Justice, Environmental Protection Agency, and the Pennsylvania Dept. of Environmental Protection over charges of releasing too much air pollution from facilities they operate throughout eastern Ohio and western Pennsylvania in the Utica and Marcellus shale. The agreement signed yesterday by MarkWest calls for the company to spend $2.6 million to install and operate new technologies to minimize VOC (volatile organic compounds) emissions at their facilities–19 major, standalone facilities and 273 smaller facilities. The company will also implement three supplemental environmental projects (SEPs) for an additional $2.4 million. In addition, MarkWest will pay the government a $610,000 fine (i.e. shakedown). Total cost to get the government of out their hair: over $5.6 million. The government claimed MarkWest had not applied for nor complied with necessary permits. But the real disaster, the thing that sent government bureaucrats into fits, is that MarkWest failed to file proper paperwork required under the Clean Air Act. However, the settlement didn’t all go the government’s way. In agreeing to the settlement, MarkWest “expressly denies and does not admit any liability to the United States or PADEP arising out of the conduct, transactions or occurrences alleged in the complaint,” which means antis can’t file frivolous lawsuits against MarkWest over air pollution…
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MarkWest Building 6 New Processing Plants, 3 Fractionators in 2018

Attendees at yesterday’s Utica Midstream conference at Walsh University in North Canton, Ohio got an earful about pipelines and processing plants. Perhaps the biggest news coming from the event (for us, anyway), is that MarkWest Energy, now part of Marathon Petroleum, plans to build another six natural gas processing plants and another three fractionation plants in the Marcellus/Utica THIS YEAR. MarkWest plans to spend a whopping $2 billion in the region this year! That’s in addition to building two new processing plants and three fractionation plants last year. A processing plant accepts raw hydrocarbons coming out of shale wells and separates out the methane from everything else–“cleaning up” the methane so it’s pipeline-ready. Fractionation takes what’s left after the methane is removed and separates those other hydrocarbons into their discrete molecules–ethane, propane, pentane, butane, etc. According to MarkWest, M-U moving butane to new markets will be a major focus this year. We also learn that MarkWest’s Sherwood facility (in WV) is now the fourth largest gas processing plant in the U.S.–and by the end of this year, it will be #1! In addition to MarkWest, there were a number of other top notch speakers at yesterday’s event, including Rick Simmers from the Ohio Dept. of Natural Resources. Rick mentioned in passing there’s a shale well pad in southeast Ohio with a whopping 28 wells on it. Below is a summary of what was said at yesterday’s event…
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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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Construction Co. Files Lawsuit Against MarkWest, Claims $40M Owed

A construction company based in North Dakota, Bilfinger Westcon, has filed several lawsuits against MarkWest Energy (now owned by Marathon Petroleum) claiming MarkWest has failed to pay more than $40 million for work done on a number of projects. Bilfinger Westcon says MarkWest used a “time & materials cap” scheme to cap the amount of money they paid for various projects, but then slipped in last-minute change orders. Essentially, it was a way of getting more work for free–that’s the charge being made. Bilfinger says MarkWest was getting ready to sell itself to Marathon and wanted to rush to complete several projects and using time & materials cap was how they did it without breaking the bank. We have to say this is the first time we’ve heard or read anything negative about MarkWest’s business practices. We suspect there’s another side to this story, but MarkWest says they won’t comment on pending litigation. Here’s the Bilfinger Westcon side of the story…
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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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Doddridge, WV Drilling & Processing is Marcellus-Central

Doddridge County, WV

There’s no question that Doddridge County is one of the most active counties in West Virginia, with respect to the Marcellus/Utica industry. Doddridge is home to MarkWest’s Sherwood complex, the single largest gas-processing complex in the Northeast with eight cryogenic processing facilities. Antero Resources, an active (really big) driller in Doddridge, is building a huge wastewater recycling facility in the county. As we reported in September, the tax base in the county has tripled over the past seven years (see Doddridge County, WV Tax Base Triples in 7 Yrs Thx to M-U Shale). Dominion Energy also has a large presence in the county with hundreds of miles of gathering and interstate pipelines. Yes, Doddridge is a happenin’ place when it comes to the Marcellus. We’d call it “Marcellus-Central” in WV…
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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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KM Plans to Convert Tennessee Gas Pipeline to Flow M-U NGLs South

TGP – section of pipeline to reverse & convert to NGLs (click for larger version)

Here’s a story that wasn’t actively on our radar. It’s an old story, but is now in the news again with the recent quorum reestablished at the Federal Energy Regulatory Commission (FERC). In August 2013, exactly four years ago, midstream giant Kinder Morgan and competitor midstream company MarkWest Energy (now part of Marathon Petroleum) signed a joint venture agreement to repurpose a significant portion of Kinder’s Tennessee Gas Pipeline (964 miles of it) running from the Louisiana Gulf Coast to Ohio. That 964-mile portion of TGP currently flows natural gas from the Gulf northward. Kinder and MarkWest want to reverse the flow and instead flow natural gas liquids (NGL) through the pipeline from the Utica and Marcellus region south to the Gulf Coast. The project would also build a new 200-mile pipeline from TGP in Louisiana to Texas. In order to make the project happen, the first step is to ask FERC for permission to “abandon” (stop using) the 964-mile segment, called Pipeline No. 1, from Louisiana to Ohio. Which TGP did in Feb. 2015. The project progressed. Last November FERC issued a favorable environmental assessment for the project (full copy below). And then FERC lost a quorum of voting members in February of this year, stalling further progress. With a quorum now restored, antis in Kentucky, a state that seems to be allergic to any kind of pipeline for any purpose, have begun bellyaching about it. Which is what caught our attention. We’ve gathered together information we can find on this project–a potentially very important project–to move Marcellus/Utica NGLs to the Gulf Coast…
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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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