| | | | |

Dominion Signs Deal to Transport CONSOL Marcellus Shale Gas for Next 15 Years

From a Dominion press release issued today:

Dominion today announced that its natural gas transmission and storage subsidiary, Dominion Transmission, has reached a 15-year agreement with the gas subsidiary of CONSOL Energy Inc. for firm transportation of CONSOL’s Marcellus shale natural gas production.

The project, capable of transporting 200,000 dekatherms per day, will move supplies from various receipt points in central and southwestern Pennsylvania to a nexus of market pipelines and storage facilities in Leidy, Clinton County, Pa.

“Dominion is pleased to provide CONSOL with year-round access to growing Northeast markets and to provide another supply alternative for market area customers,” said Gary Sypolt, chief executive officer of Dominion Energy. 

Earlier this year Dominion sold its natural gas exploration and production business to CONSOL so that the company could concentrate on its regulated businesses, including increased transportation and storage infrastructure opportunities resulting from Marcellus shale discoveries.

Dominion plans to file for a FERC certificate in December. If the project is approved, construction is planned to begin in March 2012, and it would enter service in November 2012. Construction plans include new compression facilities at three existing compressor stations in central Pennsylvania.

Dominion Transmission provides gathering, processing, transportation and storage services, operating in the heart of the Marcellus shale production area.

Dominion is one of the nation’s largest producers and transporters of energy, with a portfolio of more than 27,500 megawatts of generation, 12,000 miles of natural gas transmission, gathering and storage pipeline and 6,000 miles of electric transmission lines. Dominion operates the nation’s largest natural gas storage system with 942 billion cubic feet of storage capacity and serves retail energy customers in 12 states.

*Dominion Press Release (June 14) – Dominion Announces 15-Year Contract for Marcellus Northeast Natural Gas Project

| | | | |

Marcellus Shale Ethane Headed to the Gulf Coast in a New Plan from MarkWest and Sunoco

MarkWest Liberty Midstream is partnering with Sunoco Logistics to use existing and new pipelines in a project that will take Marcellus Shale gas liquids (ethane) from the northeast all the way to the Gulf Coast. How’s that for a change?! Ethane is primarily used in manufacturing plastics and is one of the by-products obtained from processing shale gas methane. Range Resources and Chesapeake Energy are among the major Marcellus Shale producers who are supporting the project and will sell processed ethane using the new system offered by MarkWest and Sunoco Logistics. Part of the project includes constructing a new 45-mile pipeline from Houston, PA to Delmont, PA. The ethane arriving at Delmont will then be piped to the East Coast, and from there it will go by ship to the Gulf Coast.

From the official press release:

MarkWest Liberty Midstream & Resources, LLC, a partnership between MarkWest Energy Partners, L.P. and The Energy & Minerals Group, and Sunoco Logistics Partners L.P. today announced a combined pipeline and marine project for ethane produced in the Marcellus Shale Basin. The Mariner Project is anticipated to have initial capacity to transport up to 50,000 barrels per day of ethane to Gulf Coast markets as soon as the second quarter of 2012 and could be scaled to transport higher volumes to support additional ethane production in the Marcellus region. MarkWest Liberty has been working with key producers and petrochemical consumers since late 2009 and the project is supported by key producers including Range Resources Corporation and Chesapeake Energy Corporation.

The Mariner Project includes MarkWest Liberty making minor modifications to its processing facilities to recover sufficient ethane to allow the residue gas to meet interstate gas pipeline specifications and installing additional facilities at its Houston, Pennsylvania processing and fractionation complex to separate the ethane for delivery to downstream Mariner Project facilities. MarkWest Liberty will also construct a 45-mile pipeline from the Houston complex to an interconnection with an existing Sunoco Logistics pipeline at Delmont, Pennsylvania. The ethane will be transported to an existing East Coast facility where Sunoco Logistics will construct refrigerated ethane storage facilities. The ethane will then be transported via marine vessel to premium markets in the Gulf Coast. In addition, the existing Sunoco Logistics pipeline crosses many of the large pipelines transporting natural gas into the northeast, which will provide multiple ethane blending options.

“We are excited to be able to participate in the Mariner Project and we are especially pleased to partner with MarkWest Liberty due to their extensive experience in the Marcellus Shale Basin,” said Deborah M. Fretz, President and Chief Executive Officer of Sunoco Logistics. “Our existing Pennsylvania active and idle pipeline infrastructure is well-positioned to provide an efficient solution for producers to move ethane across Pennsylvania to a Delaware River marine port to access multiple markets. The combination of MarkWest Liberty’s fractionation complex and Sunoco Logistics’ transportation system offers producers a higher value for their natural gas liquids by transporting only the ethane portion of the liquids and allowing the heavier liquids to remain in the northeast marketplace.”

Frank M. Semple, Chairman, President and Chief Executive Officer of MarkWest stated, “We have been working with Sunoco Logistics and our producer customers for a number of months and we believe the Mariner Project provides the most efficient solution to maximize the value of Marcellus ethane, supports the development of more than 2 BCF per day of Marcellus rich gas, and significantly accelerates the in-service date to transport ethane compared to other pipeline projects. MarkWest and The Energy & Minerals Group are very pleased to partner with Sunoco Logistics because of their strong set of assets and significant experience in the storage and transportation of liquefied petroleum gas.”

*Businesswire (June 1) – MarkWest Liberty Midstream & Resources and Sunoco Logistics Announce New Marcellus Ethane Pipeline and Marine Project

| | | | | |

MarkWest Request to Expand Gas Compressor Facilities in Washington County, PA Denied

As MDN has previously reported (see this story), MarkWest Energy operates more than 100 gas compressor facilities, including two in Mount Pleasant Township in Washington County, PA—the location of the very first horizontally drilled Marcellus Shale gas well. There has been tension between area residents and MarkWest about the facilities over issues of noise, lights and odors coming from the facilities. A few months ago MarkWest made application to expand the facilities but the Mt. Pleasant Township Zoning board has just turned them down:

The board denied a request from Mark West Liberty Midstream to expand its Fulton and Stewart compressing stations.

The company had made the request to add two engines at each site and expand the steel structures. The company processes gas for Range Resources.*

MDN doubts this will be the end of this story. There is an ongoing debate about just who has authority to regulate pipelines and compressor facilities, and the matter is far from settled. Does regulation for these types of facilities lie with local governments? Or is it a “utility” that is/should be regulated by the state rather than local authorities? Stay tuned.

*Washington Observer-Reporter (May 12) – Board nixes expansion for gas compressing stations in Mt. Pleasant Township

| | | | | | | |

Marcellus Shale Companies in Pennsylvania Looking to Fill Jobs and Contract with Local Businesses

Companies involved in drilling, processing and transporting Marcellus Shale gas in Pennsylvania are looking to contract with local businesses and hire local people to work for them. On the list are…

  • Contractors for:
    • clearing land
    • constructing well pads
    • setting up rigs
    • running wirelines
    • hauling waste
    • hauling dirt
    • mechanical work
    • civil work
    • electrical work
    • environmental surveyors
    • installers
  • Real estate/office space
  • Drilling crews
  • Frac crews
  • Right-of-way agents
  • Suppliers for:
    • drilling mud
    • frac fluid
    • steel pipes
    • valves and fittings
    • natural gas compressors
  • Engineering firms
  • Environmental firms
  • Professionals:
    • geologists
    • geophysicists
    • environmental engineers

The companies looking to hire include:

  • East Resources
  • Chief Oil & Gas
  • Laurel Mountain Midstream
  • MarkWest Energy
  • Talisman Energy

For more details, along with contact names and inside tips for submitting a bid or applying for a job, see the article linked below.

*Pittsburgh Business Times (Apr 29) – The Marcellus Shale: How your company could get in on the action

| | | | | | | |

National Fuel Does Pipeline Deal with Statoil and East Resources to Move Marcellus Shale Gas to Canadian & Northeast US Markets

National Fuel has struck a deal with Statoil and East Resources and is expanding two pipelines to handle Pennsylvania Marcellus Shale gas, sending it to markets in Canada and the Northeastern U.S. The announcement says National Fuel will build 16 miles of new pipeline from Corning, NY to Tioga County, PA, and construct a new interconnection with the Tennessee Gas Pipeline in Ontario County, NY, among other improvements.

From the National Fuel press release:

WILLIAMSVILLE, N.Y.–(BUSINESS WIRE)–National Fuel Gas Supply Corporation (“Supply”) and Empire Pipeline, Inc. (“Empire”), the companies that comprise the Pipeline and Storage segment of National Fuel Gas Company (NYSE: NFG) (“National Fuel”), have reached major milestones on two pipeline expansion projects that are the first in the industry designed to receive natural gas produced from the Marcellus Shale and transport it to key markets of Canada and the Northeast U.S. Supply has entered into a binding precedent agreement with Statoil Natural Gas LLC (“Statoil”) for 100 percent of the capacity on Supply’s “Northern Access” expansion project. Empire also has a binding precedent agreement in place with anchor shipper East Resources, Inc. (“East”) for Empire’s “Tioga County Extension” project, and is concluding negotiations for additional capacity with a second shipper. The precedent agreements provide for Statoil and East to sign, after satisfaction of conditions, firm transportation service agreements under which Supply and Empire will transport natural gas for Statoil and East.

Continue reading

| | |

Kinder Morgan Building New Marcellus Shale Pipeline from Pennsylvania to Michigan

Kinder Morgan, a pipeline and energy storage company, will build a new 250-mile pipeline from Pennsylvania to the Cochin Pipeline in Michigan to move Marcellus Shale gas to processing facilities and markets in the Midwestern U.S. and Canada.

From the Kinder Morgan press release:

HOUSTON, April 20, 2010 – Kinder Morgan Energy Partners, L.P. today announced plans to modify and expand the existing Cochin Pipeline system to provide a solution for transporting natural gas liquids (NGL) from the Marcellus Shale Basin to fractionation plants and chemical markets near Sarnia, Ontario, and Chicago, Ill.

Kinder Morgan plans to build approximately 250 miles of NGL pipeline from the Marcellus Shale Basin in southern Pennsylvania to the Cochin interconnect at Riga, Mich. From Riga, Kinder Morgan anticipates that product will be transported through the existing Cochin Pipeline system to Windsor, Ontario, and then through the Windsor-Sarnia Pipeline to Sarnia. Kinder Morgan also plans to reverse the eastern leg of its Cochin pipeline in order to move NGLs from Riga to the Chicago area, where it expects to build an additional pipeline to connect to existing fractionation facilities and chemical plants.

“Our proposed pipeline and key existing infrastructure offers NGL producers the quickest and most efficient solution to get their product to the market,” said Don Lindley, vice president of business development for Kinder Morgan’s Products Pipeline group.

The pipeline will be designed to transport mixed NGLs (Y-grade), as well as purity NGLs such as ethane, and will have an initial throughput capacity of 75,000 barrels per day and can be expanded to handle up to 175,000 barrels per day.

The recent decision by Canada’s National Energy Board directing the reconnection of the Cochin Pipeline to the Windsor-Sarnia Pipeline will enable Cochin Pipeline shippers to have access to the Sarnia chemical complex. Kinder Morgan anticipates offering transportation from Marcellus to Sarnia for under 14 cents per gallon.

Kinder Morgan expects to move forward with an open season in the second quarter of 2010.

Kinder Morgan Press Release (Apr 20) – Kinder Morgan Offers Quick and Efficient Solution to Move Marcellus NGLs to Market

| | |

A New and Potentially Safer Way to Treat Marcellus Shale Wastewater

A Pittsburgh startup company formed at the Pittsburgh Allegheny-Singer Research Institute believes it has developed a better solution than current alternatives for treating wastewater from drilling Marcellus Shale gas wells. Frac Biologics Inc. was founded by physicians, so it’s no surprise the technology comes from the medical community:

“The idea for the company came from our work with biofilms, which are (cell) communities that we try to manipulate or get rid of to treat human disease,” said Christopher Post, a physician and CEO of the 3-month-old company. Other founders are physician William Costerton and Garth Ehrlich. All three are Allegheny-Singer directors.

Allegheny-Singer researchers found the biofilms love to eat heavy metals, such as strontium, nickel, even uranium. The metals, in effect, fuel the biofilms, Post said.*

Water used in drilling Marcellus wells often comes out of the well containing small quantities of heavy metals. One of the objections to hydraulic fracturing is that wastewater from drilling eventually needs to be returned to the environment, and if it’s laced with heavy metals it is not safe. If Frac Biologics is successful with their concept, perhaps some of those objections can be addressed.

*Pittsburgh Tribute-Review (Apr 22) – New company says it can safely handle Marcellus wastewater

| | | | | | |

MarkWest Expands Marcellus Shale Gas Processing Capacity in West Virginia & Pennsylvania

MarkWest Liberty Midstream & Resources—also known as MarkWest Energy—announced today it is expanding its processing and fractionation capacity in the Marcellus Shale in West Virginia (Marshall County) and Pennsylvania (Washington County). What exactly does that mean, and why should landowners care? MarkWest is a “midstream” company, providing processing, storage, transportation and marketing for natural gas. Think of midstream companies as bridges between energy companies that do the drilling, and the large pipelines that deliver natural gas to buyers. Along the way the gas must get from the well to a processor where it’s cleaned up and separated into different products. There are different types of chemical compounds in “natural gas” and impurities must be removed before it’s saleable. MarkWest provides processing, fractionation (a separation process), pipelines, compressor facilities and more.

The MarkWest announcement means drillers will have more capacity to clean up, transport and market the gas they discover. More capacity expands the market. The MarkWest announcement says they have “reached definitive agreements” which will allow them to expand operations, but it does not say which energy companies those agreements have been made with.

From the MarkWest press release:

Continue reading

| | |

Proposed New Marcellus Wastewater Treatment Plant Shifts from Athens Township to Tuscarora Township

After getting turned down by the supervisors in Athens Township, PA, Somerset Regional Water Resources is now planning to build a Marcellus wastewater treatment plant in nearby Tuscarora Township. Both Athens and Tuscarora are located in Bradford County in Northeastern Pennsylvania.

A search of DEP permit applications confirms that Somerset has applied for a permit to use the former Cornell Manufacturing building (more recently Pendu Manufacturing) just off Route 6 in Tuscarora Township at the intersection of Township Roads 524 and 494. The new name for the facility, as stated in the permit application, is the Tuscarora Township Wastewater Treatment Facility. It is actually in the first phase of the permitting process, having completed the preliminary administrative review and now into what is known as the technical review.*

Supervisors in Tuscarora have not yet been approached by Somerset to officially request permission to proceed, a step that will have to come soon in the process. If the supervisors approve the facility, it will also require approval from the PA State Department of Environmental Protection, which is estimated to take between 12-18 months.

If all goes according to plan, the facility will employ about 40 people. It is projected there will be about 180 truck trips in and out of the facility per day once it’s operational.

*Wyalusing Rocket-Courier (Apr 1) – Gas Well Water Treatment Plant Proposed at Former Cornell Plant in Tuscarora Township

|

Video Interview with John Sherman, CEO of Inergy, About Infrastructure in the Marcellus Shale

TheStreet.com reporter Debra Borchardt interviews John Sherman, CEO of Inergy, a company that, among other things, provides transportation and distribution of natural gas. They are the nation’s fourth largest propane distributor, and they “have their eye” on the Marcellus Shale, with plans for major investments in the Northeast to meet demand in the Marcellus region.

Sherman says that natural gas is clean burning and is a “transition fuel” for the United States. Watch the short segment from TheStreet.com to learn more about Inergy’s plans for the Marcellus Shale.

| | | | |

Binghamton Natural Gas Summit: Millennium Pipeline President Richard Leehr

richard-leehr-millennium One of the speakers at the Natural Gas Development Summit held in Binghamton on March 18th was Richard Leehr, president of Millennium Pipeline (MP), a major natural gas pipeline running from Western New York State almost to New York City. What follows are MDN’s notes from his presentation. Unfortunately Millennium has a policy against sharing their PowerPoint slides on the web (we asked and were turned down). It’s unfortunate because there were a number of good slides that would be of interest to landowners. However, MDN located two PDF maps showing the MP and its interconnect points with other pipelines, and a pipeline system map for Upstate New York and the Northern Tier of Pennsylvania (see bottom of this post for the links).

Dick Leehr started his presentation with a “thank you” to landowners for their patience and inconvenience during the recent construction of the pipeline. The MP has its home office in Pearl River, NY, almost on the border with New Jersey and not far from metro New York City. The MP is an underground steel 30-inch diameter pipeline with 1 inch thick walls. The steel is coated and should last at least 100 years.

The MP has the capacity to move 1/2 BCF (billion cubic feet) of natural gas over the entire length of the pipeline per day. On January 4th, the MP hit its current high in delivery with 714,000 dekatherms.

Mr. Leehr said to think of pipelines as Interstate Highways. Shippers contract or “reserve” capacity on the pipeline. The pipeline picks gas up at one point and delivers it to a different point specified by the customer. Pipelines are among the safest forms of energy transportation in the country according to Leehr.

Continue reading

| | | | | |

Breaking News: PA Supreme Court Rules Against Landowner Seeking to Invalidate Lease

Last year, Susquehanna County landowner Herbert Kilmer sued ElexCo Land Services Inc. and Southwestern Energy Production to invalidate his lease. The reason? He said that by deducting drilling costs from his royalty payments, his payments fell below Pennsylvania’s law that a minimum one-eighth share of royalties are guaranteed to the landowner. A Susquehanna County judge ruled against the landowner and in favor of the energy companies. Other people started filing lawsuits, so the energy companies asked the PA Supreme Court to take up the matter. The Supremes did, and today they also ruled in favor of the energy companies:

Pennsylvania’s high court sided Wednesday with the natural gas industry in a dispute with landowners who had sought to invalidate the leases they signed before the Marcellus Shale rush intensified and drove up land values.

In a 6-0 decision, the Supreme Court upheld a Susquehanna County judge’s ruling that validated lease agreements that subtract drilling costs from the calculation of landowners’ natural gas royalties.

Justice Max Baer, who wrote the court’s decision, noted that the term “royalty” and the method of calculating a one-eighth share is not defined by the state’s Guaranteed Minimum Royalty Act. However, he cited various texts on the industry that say a royalty is paid from the net amount remaining after deduction of certain production and well development costs.*

This case will now force similar pending cases to be settled or dismissed. Landowners beware: (1) There is no such thing as a “standard” contract, and (2) Always have an attorney review a lease agreement first.

*BND.com (Mar 24) – Pa. justices side with gas industry over landowner

| | |

Enbridge Building a Pipeline from Southern PA Marcellus Shale to Chicago

Canadian oil and gas pipeline company Enbridge has announced plans to build a pipeline from the Marcellus Shale in Southern PA to the Chicago area.

From the Enbridge press release*:

Enbridge Inc. today announced it intends to develop a natural gas liquids (NGL) pipeline from the Marcellus Shale in Southern Pennsylvania and Northern West Virginia to markets in the Midwestern United States.

The proposed pipeline is currently targeted to deliver into existing NGL infrastructure in the Chicago area including the Aux Sable facility which processes gas from Alliance pipeline and fractionates NGLs from various supply sources. Additional NGL fractionation capacity is available at the plant.

“The Chicago area has substantial markets to accommodate the large volumes of NGLs that are expected to be associated with future Marcellus production. Other NGL markets, including Ontario, can also be accessed from Chicago utilizing existing infrastructure. This proposed pipeline will provide an excellent long term solution for development of this promising play, as it will enable NGL production to grow unconstrained for many years,” said Stephen J.J. Letwin, Executive Vice President, Gas Transportation & International, Enbridge Inc.

“Enbridge has extensive knowledge and expertise in the areas of NGL fractionation, transportation and marketing. With this proposed pipeline, we are uniquely positioned to help Marcellus producers obtain greater value for their future NGL production” Mr. Letwin said.

Enbridge will develop, construct, own and operate the planned NGL pipeline. The Company is currently evaluating various routing and market alternatives and anticipates moving forward with an open season in the second quarter 2010.

*Enbridge (Mar 22) – Enbridge Announces Plans to Hold Open Season for Proposed Natural Gas Liquids Pipeline from Marcellus Shale to Chicago

| | |

PVR Midstream Building New Pipeline and Compression Facilities in Wyoming County, PA

From a Penn Virginia Resource Partners press release issued today:

The midstream division of Penn Virginia Resource Partners, L.P. (NYSE: PVR), PVR Midstream, announced today that it has entered into an agreement to construct and operate gas gathering pipelines and compression facilities servicing a private firm’s Marcellus Shale natural gas production in Wyoming County, Pennsylvania.

PVR Midstream will construct a 12-inch gathering pipeline and compression facilities with 25 million cubic feet (MMcf) per day of throughput capacity. This system is expected to become operational during the second quarter of 2010, with the potential for additional system extensions.

PVR Midstream’s 2010 capital investment in this system is anticipated to range from $6 to $7 million, with potential future system extensions costing up to $10 million. PVR Midstream expects its investment to be accretive to distributable cash flow once the system is operational.

See the full press release (Mar 16): Penn Virginia Resource Partners, L.P. Announces Gathering and Compression Agreement with Private Producer in the Marcellus Shale

| | | | |

New Marcellus Wastewater Treatment Plant Set to Open in Westmoreland County, PA

The Pennsylvania State Department of Environmental Protection has issued a permit for a new Marcellus drilling wastewater treatment facility to begin operations in April in western PA.

Stephen Frobouck, a partner in Reserve Environmental Services Inc., said the treatment facility at the former American Video Glass plant in East Huntingdon, Westmoreland County, is ready for operations to begin in April.

"We will have the capacity to handle (water from) 500 to 600 wells a year," Frobouck said Friday, declining to say how much the firm paid to prepare the plant for its new use.*

*Pittsburgh Tribune-Review (Mar 13) – Plant near New Stanton to treat gas wastewater

| | | | |

PA Gas Compressor Facility Causing Grief for Some Neighbors

In states where drilling is now happening, particularly Pennsylvania, there appears to be issues with some (not all) compressor stations used to pump gas from local wells to nearby processing facilities. One such station is located in Mount Pleasant Township in Washington County, PA. Mount Pleasant is the location of the very first horizontal gas well drilled in the Marcellus.

The compressor station in Mount Pleasant is operated by MarkWest Energy, a company that operates more than 100 other such facilities in the U.S. MarkWest has made application to add a fifth compressor to the facility to meet increasing demand, and some of the nearby neighbors are objecting to the noise, lights and odors that come from the facility. An article in the Pittsburgh Post-Gazette, although taking an anti-drilling tone, exposes the tensions that occur in some locations between compressor operators and the people that live close by. It also highlights the debate over where regulation of these facilities lies—with local municipalities? Or with the state?

Read the article for more details:
Pittsburg Post-Gazette (Mar 14) – Neighbors take a stand on noise, odor of gas drilling