Two US midstream master limited partnerships (MLPs), Regency Energy Partners and American Energy Midstream, have entered into a joint venture agreement for the construction and operation of the $500 million Utica Ohio River project, according to a statement.
Under the agreement, Regency will contribute 75 percent while American Energy Midstream will put in 25 percent of the total cost. Regency will construct and operate the project on behalf of the joint venture, it said.
Regency and an affiliate of American Energy, American Energy Utica (AEU) will also enter into a gathering agreement for gas produced from the Utica Shale in eastern Ohio by AEU.
Regency and AEU will contribute all previously signed agreements to the joint venture. These agreements include volume commitments and large acreage dedications, the statement said.
As a result, Regency and American Energy will upsize the project to accommodate over 2 billion cubic feet per day (Bcf/d) of firm volume commitments. These commitments represent the majority of the projected volumes in the 52-mile footprint of the pipeline, it added.
The upsized project will include construction of a 52-mile, 36-inch gathering trunkline that will be capable of delivering up to 2.1 Bcf/day to Rockies Express Pipeline (REX) and Texas Eastern Transmission on the southern end of the line.
Additionally, there is the potential to connect to the interstate grid on the northern end of the trunkline which would increase overall system deliverability to 3.5 Bcf/day. The full project is expected to be completed in the third quarter of 2015.
“We are excited about the strong growth potential of the Utica Shale, and this project will be a main takeaway option for Utica development, providing interconnectivity with major interstate pipelines in 2015,” said Art Cantrell, senior vice president, eastern region at Regency.