MarkWest, EMG to Develop Utica Shale

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Natural gas processor and distributor, MarkWest Energy Partners LP (MWE), along with private-equity group, The Energy & Minerals Group (“EMG”) has entered an agreement with independent oil and gas company Gulfport Energy Corp. (GPOR), to develop condensate solutions in the Utica Shale. Per the agreement, MarkWest and EMG would provide stabilization and gathering services for the produce from the regions of Belmont, Harrison, Guernsey, Noble, and Monroe counties, Ohio.

A joint venture – Ohio Condensate Company, LLC – will be formed between MarkWest and EMG to provide infrastructural support to the growing condensate production in the Utica shale. Initially, a condensate stabilization unit along with necessary logistics and storage terminals will be built in Harrison County, Ohio, which is expected to come online by the third quarter of next year.

The raw condensate will be stabilized at the facility that will have a capacity of 23,000 barrels per day (Bbl/d), with 30,000 Bbl/d expansions to follow. A subsidiary of Toledo, Ohio-based Midwest Terminals will provide the truck and rail loading facilities to carry the stabilized condensate to refineries and export markets. Additional pipelines and a condensate gathering system could be added to the facility in the future to support delivery.

The facility may also act as the starting point for the Cornerstone Pipeline, a condensate pipeline project of the oil and gas pipeline operator MPLX LP (MPLX). The pipeline project is expected to be online by the latter half of 2016.  

Gulfport presently has more than 147,000 net acres in the Utica Shale and is in the process of developing its assets in the emerging oil-rich areas of the shale. MarkWest and EMG on the other hand are in the process of developing Utica’s largest fully integrated midstream solution. The project includes several miles long gathering pipelines and three large scale facilities with a total processing capacity of over 1 billion cubic feet and ethane and heavier fractionation capacity of about 138,000 Bbl/d.

Denver, Colorado-based MarkWest Energy currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can consider better-ranked stocks such as Zacks Ranked #1 (Strong Buy) Harvest Natural Resources Inc. (HNR).

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