Chesapeake Energy Corp. (NYSE: CHK) announced the execution of definitive agreements to build the largest integrated midstream service complex in eastern Ohio. Chesapeake, through affiliates of its wholly owned subsidiary, Chesapeake Midstream Development LP (CMD), has entered into a partnership with M3 Midstream LLC (Momentum) and EV Energy Partners LP (NASDAQ:EVEP) to develop the midstream services complex. The complex will provide necessary infrastructure to process natural gas and natural gas liquids (NGLs) in the liquids-rich Utica shale play in eastern Ohio.
The complex will consist of natural gas-gathering and compression facilities constructed and operated by CMD, as well as processing, NGL fractionation, loading and terminal facilities constructed and operated by Momentum. The state-of-the-art cryogenic processing facility will be located in Columbiana County and have an initial capacity of 600 million cu. ft. per day. NGLs will be delivered to a central NGL hub complex in Harrison County that will feature an initial storage capacity of 870,000 bbl. and fractionation capacity of 90,000 bbl. per day, as well as a substantial rail-loading facility.
The partnership plans to invest approximately $900 million over the next five years with the majority of the capital invested in the first two years. The current ownership structure of the partnership is 59% by affiliates of CMD, 33% by Momentum and 8% by EVEP.
Total E&P USA Inc., Chesapeake’s 25% joint venture partner in the Utica shale wet-gas acreage, has an option to participate in the project, which may proportionately reduce the ownership of CMD affiliates and EVEP to 44% and 6%, respectively. Significant engineering and procurement has already begun for the project with the first cryogenic processing and fractionation plants scheduled to be in service by the second quarter of 2013.
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