Two Houston-based companies — Hilcorp Energy Co. and NiSource Gas Transmission and Storage — have announced plans to build a large natural gas processing plant and pipeline system in Northeast Ohio and western Pennsylvania.
200 million cubic feet of gas per day, fed to it by 50 miles of 20-inch pipeline that will be constructed for the project.
A total price tag was not disclosed, nor was the location of the proposed plant, which would process “wet gas” and remove from it valuable liquids used in industries such as plastics and petrochemicals. However, NiSource said the first phase of construction, to begin later this year, will cost about $300 million.
The two companies are forming a new venture, Pennant Midstream LLC, to construct and operate the pipeline and plant.
In addition, the two companies hold drilling rights in both Ohio and Pennsylvania and will combine them as part of the joint venture. A spokeswoman for NiSource said additional information on the drilling rights would be released at a later date.
The project is yet another sign of the economic draw of shale gas and other resources found in Ohio's Utica shale, as well as the Marcellus shale play in Pennsylvania. NiSource CEO Robert Skaggs called it “a tangible example of the various upstream and midstream growth options available to NiSource across the shale energy region.”
He added, “We will continue to build our inventory of growth and investment projects as development and delineation of the shale play unfolds.”
NiSource spokeswoman Chevalier Mayes said the processing plant will anchor the pipeline system by serving as its primary endpoint. The facility also will have the capacity to process gas from other sources. Ms. Mayes said the processing plant and pipeline network also can be expanded as drilling progresses in the region.
“The facilities can and will be expanded as Utica/Point Pleasant shale production grows in northeast Ohio and western Pennsylvania,” Ms. Mayes told Crain's in an email.
“The producers in the area are still acquiring and consolidating leasehold acreage positions and will begin drilling test wells this year,” she said. “Rapid development is expected to begin in 2013 once the science and engineering work is done to evaluate the play.”
NiSource, the parent company of Columbia Gas of Ohio and a national giant in the natural gas industry generally, has announced similar projects in Ohio and Pennsylvania this year. Among those projects are a 90-mile pipeline system in southeastern Ohio and a 70-mile pipeline in southwestern Pennsylvania.
By Dan Schingler
10:56 am, July 10, 2012
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