MarkWest Constructs Natural Gas Facilities to Process Natural Gas in the Marcellus Shale

---

Researched by Industrial Info Resources (Sugar Land, Texas)--MarkWest Liberty Midstream & Resources LLC, a partnership between MarkWest Energy Partners LP (NYSE:MWE) (Denver, Colorado) and Midstream & Resources Funds, is nearing the mechanical construction phase on the $55 million Majorsville natural gas processing plant near Dallas, West Virginia, in the state's panhandle. The Majorsville plant was the result of an agreement by MarkWest Liberty Midstream & Resources LLC (MarkWest Liberty) to process hydrocarbon-rich natural gas produced in Marshall and Wetzel counties by Chesapeake Appalachia LLC, a subsidiary of Chesapeake Energy Corporation (NYSE:CHK) (Oklahoma City, Oklahoma) and Statoil Natural Gas LLC, a wholly owned subsidiary of Statoil-Hydro ASA (NYSE:STO) (Stavanger, Norway).

MarkWest began the construction phase of the 120 million-standard-cubic-feet-per-day Majorsville gas plant in late 2009, and is expecting to select the mechanical contractor in March 2010. The Majorsville gas plant will be designed to process a 120 million-standard-cubic-foot-per-day stream of natural gas and remove approximately 2.4 gallons of NGL's per thousand cubic feet of natural gas (2.4 gpm). The Majorsville plant will require four new 3608 Caterpillar engine-driven Ariel compressors, which will provide compression to the new facility. A targeted completion and in-service date for the new Majorsville plant is set for some time in July or August 2010. Thomas Russell Company (Tulsa, Oklahoma) was awarded the engineering and major equipment contract for the Majorsville plant.

Even before the completion of the Majorsville plant, MarkWest Liberty will begin designing and possibly constructing the $60 million Majorsville II natural gas processing and NGL production plant. Construction on the Majors Ville II plant could begin as early as the fall of 2010, with a completion date set for late 2011. The second plant will be designed to process a similar 120 million-standard-cubic-foot-per-day stream of natural gas and extracting 3 gpm of natural gas liquids. No contracts have yet been awarded for the Majorsville II plant, but MarkWest Liberty expects to move on these issues in the late second quarter of 2010. MarkWest Liberty expects that it will need an additional 5,000 horsepower of compression, but has not decided on whether it will buy more engine-driven units or electric-drive units such as Toshibas with Ariel compressors. The mixed NGL's produced at the Majorsville complex will be transported to the new Houston natural gas processing and NGL fractionation complex through a new 30-mile, 8-inch-diameter mixed NGL pipeline.

There also is early talk of another $60 million natural gas processing plant owned by MarkWest in the same area called the Smithville plant, which is to be near Smithville, West Virginia. The processing and mixed-NGL production plant would be the same 120 million-standard-cubic-feet-per-day size as the Majorsville plants I and II. Much of this is a preamble to MarkWest ratcheting up its capital spending program in its Liberty area in the Marcellus region and diverting capital dollars from other areas. During 2009, MarkWest spent $190 million in the Liberty area, $235 million in the Southwest, $25 million in the Gulf Coast, and $15 million in the northeast regions, totaling approximately $465 million in capital spending. During 2010, MarkWest forecasts spending $410 million in the Liberty area and $70 million in the Southwest region, totaling $480 million in capital spending, including $180 in joint venture contributions.

Until the third quarter of 2009 in the Liberty area gathering system, MarkWest had constructed 45 miles of high-pressure gathering lines, 20 miles of low-pressure gathering lines, 10 compressor stations, and a total of about 27,000 horsepower of compression. Between the fourth quarter of 2009 and the fourth quarter of 2012, MarkWest expects to increase the size of its Liberty gathering system by building 150 to 170 miles of high-pressure gathering lines, 70 to 80 miles of low-pressure gathering lines, and a total of 28 to 34 compressor stations, which will bring the total compression in the area to 90,000 horsepower.

On the processing site in the Liberty area, MarkWest operates the Houston and the Majorsville processing complexes. The Majorsville complex will have a total processing capacity of 240 million standard cubic feet per day, or 360 million standard cubic feet per day if Smithville comes to fruition, when completed in 2011. The Houston complex will have 620 million standard cubic feet per day of processing capacity, including a 37,000-BBL/d NGL fractionators with truck and rail facilities by the end of 2012.

MarkWest operates other natural gas-processing facilities in the Appalachian region totaling approximately 330 million standard cubic feet per day and a 24,000-BBL/d fractionator at Siloam. Supporting this existing system is a 260,000-BBL NGL storage capacity. So, all things considered, MarkWest could have a total natural gas processing capacity of 1.31 Bcf/d in operation by late 2012. MarkWest has been operating in the Appalachian basin for more than 20 years and is the largest gather and processor of natural gas in the Marcellus.

View Project Report - 200003292 200003290 200003288 12004535 24001320 200007566 200007565

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project spending opportunity databases, market forecasts, high resolution maps, and daily industry news.