Blue Racer expands its midstream infrastructurePublished: 2/6/14 @ 12:00
By TOM McPARLAND
Midstream infrastructure continues to develop in the wet natural-gas window of the Utica Shale, which has seen the bulk of the activity of Ohio’s drilling boom.
Blue Racer Midstream, a joint venture of Caiman Energy II and Dominion East Ohio Gas, last week announced long-term agreements with prominent producers to gather and process natural gas with its growing network of pipelines and processing facilities.
The new commitments came from companies that are devoting significant assets to extracting liquid-rich gas from the Utica’s sweet spot, which includes parts of Carroll, Harrison, Guernsey, Belmont, Noble and Monroe counties in the southeastern part of the state.
One of the producers to sign with Blue Racer, Eclipse Resources, is planning an “aggressive drilling program” on more than 95,000 acres there, which includes doubling its rigs by the end of the year, the company said in the statement.
Another producer, Hess Corp. plans to invest $550 million to drill about 35 more wells, primarily in the wet-gas window, this year, according to information Hess released last month.
Two other producers active in the region, CONSOL Energy Inc. and PDC Energy Inc., also partnered with Blue Racer.
As drilling and production ramps up, Blue Racer is developing a network that features 600 miles of large-diameter gathering pipelines spanning 24 counties in Ohio and West Virginia, with the capability of gathering 1.5 billion cubic feet of natural gas per day.
Last year, Blue Racer purchased a 45-mile, 24-inch pipeline from Dominion Transmission Inc. that connects its gathering systems to its Berne processing facility in Monroe County and provides immediate access to producers in the southern part of the Utica.
The Berne facility, still under construction, will allow for up to 200 million cubic feet of natural gas to be processed per day. Processing plants are important because they allow producers to obtain natural-gas liquids, or NGLs, which are then sent to fractionation plants.
“Whenever you build one of the facilities, you always allow the opportunity for expansion,” said Shawn Bennett, field director for Energy InDepth Ohio.
Berne follows the lead of Blue Racer’s Natrium Natural Gas Processing and Fractionation Plant, located along the Ohio River in Marshall County, W.Va., next to Monroe County.
Together, the Natrium and Berne plants would be large enough for Blue Racer to process 1 billion cubic feet of natural gas per day, the company said. Both facilities also feature fractionation plants to separate out from NGLs valuable butane, propane and ethane, which are then marketed worldwide.
The drilling and midstream development in the southern tier of the Utica Shale play contrasts areas to the north and west, where leasing and drilling have proceeded at a slower pace.
As drilling expands outside the southern core of the Utica, more midstream networks will come online, such as Blue Racer’s planned Petersburg complex in southern Mahoning County.
But midstream development likely won’t take place in places such as Trumbull and Mahoning counties until producers expand the scope of drilling.
Hilcorp and Halcon Resources Corp. have taken the lead in drilling in the Mahoning Valley, with promising returns, Bennett said. And as the core development matures, more producers are likely to follow in the coming years.
“As these wells start to come online, you’re going to see pipelines start to build up,” he said.