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Natural gas plant operating

August 16, 2012
By LINDA HARRIS - Business editor (lharris@heraldstaronline.com.) , The Herald-Star

CADIZ - MarkWest Energy Partners already is operating a small natural gas processing plant it built in Harrison County recently to accommodate one of its gas producers, even though the full-sized version should be done in the near future.

MarkWest Chief Operating Officer John Mollenkopf said Arrowhead, a refrigeration gas processing mini-plant located about 15 miles from Cadiz, came online just a few days ago. It's capable of processing 40 million cubic feet of gas per day until the full-sized plant is done.

"It's an interim plant for one of our producers. They'll bring some of their gas to Arrowhead," he said during a community barbecue and education forum the company hosted Wednesday in Sally Buffalo Park.

Article Photos

Linda Harris
BOOM JUST BEGINNING — MarkWest Energy Partners Chief Operating Officer John Mollenkopf, chief operating officer of MarkWest Energy Parteners spoke during a barbecue and energy forum held Wendesday in Cadiz.

MarkWest is investing more than $500 million in gas processing and fractionation plants in the Cadiz area - full-sized projects that Mollenkopf said should be up and running very soon. Over the next few years he said that number could easily grow to more than $1 billion.

"We've been out there working for two months to get the sites ready for the plants," he said. "We're at the stage now where we're ready to start pouring foundations. The gas plant itself, the initial gas plant, will be coming on" by the end of September, while the fractionation plant is slated for early in 2013.

If all goes as they expect, Mollenkopf said it could lead to more investment.

"We certainly hope it's just the tip of the iceberg," he said. "I think that's what happened to us, certainly, in the Marcellus shale - just as soon as we'd get something finished we'd be building something else because drilling will become very active once infrastructure exists, so you'll see the gas come on very quickly. In fact, the producers were ahead of the game here because they bought these leases three years ago and already started drilling and testing, so it's likely they'll have quite a bit of gas waiting for us when we get our plants done."

The initial cryogenic gas plant will be able to handle 125 million cubic feet a day, he said. A refrigeration plant slated to be done in a couple months will handle 60 million cubic feet a day.

"The Cadiz plants will start coming on this fall and into January," he said. "Once the plant is done in January, that's our cryogenic plant, we'll be able to recover a lot of natural gas liquids. And while that's all going on, we're currently beginning grading work for our fractionater - it will be done by the end of 2013. It's going to be a huge facility. That facility is beginning construction as well."

Mollenkopf said the initial cryogenic gas plant under construction at Cadiz will handle 125 million cubic feet a day," he said. "There's going to be a refrigeration plant coming on here in a couple months that has a capacity of 60 MCF a day. The two of them will be in service by the end of January. We certainly hope it's just the tip of the iceberg."

Mollenkopf concedes it's a gamble, but so far the company has seen nothing to make it question the validity of the investment, pointing out Ohio's Utica shale play is strikingly similar to Southwestern Pennsylvania's Marcellus.

"And our experience with Marcellus ... is that the gas is there, but the infrastructure has to be in place for that gas to be produced in an area that's never had the infrastructure before. We're very confident in making the investment because we know the gas is there. We just had the experience in Southwestern Pennsylvania, which grew from no gas at all to over a half -billion cubic feet a day of gas in the last three years. We expect that to grow into the 2 BCF range in Pennsylvania. We're a few years behind that on the Ohio side, but we expect the same thing," he said.

Mollenkopf also noted initial drilling results in Eastern Ohio's Utica have been "very encouraging."

"It seems very positive," he said. "Everything we've been made aware of has given us the confidence to make the investment. Initially, it will be about $500 million for the initial projects we've publicly announced, but we're always working on other projects."

Earlier, Cadiz Mayor Ken Zipka told the group he looked forward "to a solid partnership with MarkWest," while Harrison County Commissioner Bill Host said he appreciated the company's efforts.

"We've had a pretty bad economy the last 40 years. We survived it," he said. "But things are looking to be a lot better on the horizon."

U.S. Rep. Bill Johnson, R-Marietta, said shale development "could be the catalyst to bring America's journey" back to energy independence and a strong economy.

"Think about what could happen in America if we could say over the next 10 years we will become energy independent," he said.

State Rep. Al Landis, R-Dover, said shale "is a great opportunity, and having MarkWest here in Harrison County makes it greater," while state Rep. Andy Thompson, R-Marietta, said one of the most exciting aspects of the shale play "is how many local people are being repatriated to the area. It's great to see the opportunity being presented because of this partnership to (help people) realize the American Dream" in Eastern Ohio.

 
 

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