PITTSBURGH - Chesapeake Energy and its partners will run a 12-inch diameter pipeline to connect the northern and southern portions of its $900 million natural gas processing complex in Harrison and Columbiana counties.
In total, the Oklahoma City-based company plans to lay 200 miles of pipelines across eastern Ohio in 2012, most of which will be located in Harrison, Jefferson, Columbiana and Carroll counties.
Mike Stice, president of Chesapeake Midstream Development, a subsidiary of Chesapeake Energy, spoke during the Marcellus Midstream Conference & Exhibition in Pittsburgh this week. He said the potential for collecting methane, ethane, butane, propane, pentane and even oil make the Utica and Marcellus shale formations very attractive to companies like his.
"The diversity of the opportunities is where the strength lies," he said. "We find ourselves on the cusp of a breakthrough for natural gas and oil."
Chesapeake is building the plant with M3 Midstream and EV Energy Partners. Frank Tsuru, president and chief executive officer of M3, also spoke at the conference, highlighting the 12-inch pipeline that will connect the Harrison and Columbiana portions of the major complex.
Tsuru said Chesapeake and EV, as a joint venture, own about 620,000 acres in the liquids-rich, "wet," portion of the Utica Shale is eastern Ohio.
"These shale plays are real game changers," he said, noting that because the pressure of some of the gas stream coming out of the ground is so strong, some of the existing pipeline infrastructure must be rebuilt to handle it.
According to a map on the M3 website, it appears the Harrison County portion of the complex would be built near Scio, while the Columbiana County part of the complex would be located near Hanoverton, Ohio.
In natural gas processing, the "dry" methane part of the gas stream is separated from the "wet" portions, like ethane, butane, propane and pentane. During fractionation, the natural gas liquids and other substances are separated from each other. These separated gas products are then ready for use, with the ethane possibly going to a cracker plant.
The processing facility to be located in Columbiana County will have an initial capacity of 600 million cubic feet per day. Natural gas liquids, via the 12-inch pipeline, will be delivered to a central hub complex in Harrison County that will feature an initial storage capacity of 870,000 barrels. The Harrison County facility will also have fractionation capacity of 90,000 barrels per day, as well as a substantial rail-loading facility, according to Chesapeake.
Chesapeake officials also want to make sure the industry flourishes in Ohio, noting they agree with a comment Gov. John Kasich made during his State of the State speech at Steubenville High School earlier this year.
Kasich said major gas drillers are responsible, noting he would not allow an irresponsible "yay-hoo" to ruin the industry's reputation. Stice referenced this comment during the conference, adding, "We couldn't agree more."
Also during the conference, Mark Halbritter, managing director of commercial activities for Dominion Transmission, discussed the company's $500 million processing complex, which is scheduled to open south of Moundsville by the end of this year. He said a second phase of the plant that would be completed next year could raise the final cost to about $800 million. He said the facility is strategically positioned along the Ohio River so that it can process gas derived from the Utica and Marcellus formations.
As for ethane that is derived at the Natrium site, Halbritter said the complex will be able to send ethane to Canada, the Gulf Coast, or to any local ethane cracker, such as the one Royal Dutch Shell plans for Monaca, Pa.
"We expect enough ethane to support both pipelines and up to two crackers," Halbritter's presentation states, adding the company anticipates more than 400,000 barrels of ethane will be derived from the Marcellus and Utica shales by 2020.
Jeannie Stell is the editor of Midstream Business magazine, a publication of conference organizer, Hart Energy. She said industry leaders have learned valuable lessons over the past few years of working in the Marcellus and Utica shales.
"It is never to early to start applying for a permit," she referenced as one of these lessons. As a second lesson, Stell added, is that laying pipelines in the sometimes rugged terrain of West Virginia, Ohio and Pennsylvania can be more challenging than doing so in the relative flat country of Oklahoma and Texas.