Billions needed for shale connections

PITTSBURGH – The $10 billion worth of natural gas processing infrastructure already built in the Marcellus and Utica shale region is only a fraction of what Blue Racer Midstream CEO Jack Lafield believes is needed in the coming years.

If he is correct, Blue Racer doubling the processing capacity at its Natrium plant in Marshall County is only one expansion companies such as Williams Energy, MarkWest Energy and M3 Midstream will need to make over the next 10 years to keep the natural gas flowing out of West Virginia, Ohio and Pennsylvania.

“Thirty billion dollars needs to be spent in midstream infrastructure to keep up with the demand,” Lafield said Thursday during the Marcellus-Utica Midstream Conference and Exhibition in Pittsburgh.

“Midstream” is an industry term used to describe companies that refine and transport gas for drillers such as Chesapeake Energy, Gulfport Energy, Chevron and others.

Lafield believes extracting the gas from the Marcellus and Utica regions will be worth the required investment, largely because of cheaper transportation costs involved with getting it to major metropolitan centers along the Eastern Coast. This is because it would cost more to ship gas from Texas to New York than from Ohio to New York, for example.

This week, Lafield said Blue Racer would double the daily processing capacity of its Natrium plant by spring. The facility, which recently reopened following a Sept. 21 fire, also will be equipped to ship natural gas liquids on the Ohio River by barge. In addition to the Natrium expansion, Blue Racer is continuing to build out its Berne processing complex west of Woodsfield in Monroe County.

“We are right down the heart of the rich gas fairway,” Lafield said, using a golf metaphor to describe the location of the company’s processing and pipelining facilities.

“In my 42 years in the industry … this is about as good as it gets,” he added.

Because the Marcellus and Utica shale gas contains natural gas liquids, in addition to the dry methane, the materials require processing and fractionation so each item can be marketed individually. Plants such as Natrium strip the ethane, butane, propane and other liquids from the dry methane gas.

MarkWest has already invested billions of dollars for infrastructure in the Upper Ohio Valley, but Scott Garner, vice president of corporate development, said Thursday the company plans to spend about $2 billion more this year.

MarkWest has contracts to process Ohio gas at its Cadiz, Hopedale and Seneca plants for Gulfport and Antero Resources. In West Virginia, MarkWest processes gas at the Mobley site in Wetzel County and the Majorsville complex in Marshall County, working for producers such as Chesapeake, Magnum Hunter, Consol Energy and Noble Energy.

Garner said the company is finishing a condensate stabilization facility in Hopedale that will allow this product, described as “a very light oil,” to be shipped to market via train.

Garner said working in the Marcellus and Utica regions presents even more challenges than he faced during 13 years working in the rugged terrain of Colorado and surrounding states.

“Nothing compares to the challenges in building processing plants in the Northeast,” he said.

Outside the conference hall, numerous exhibitors looking to attract some business set up shop, including employees of Grae-Con Construction in Steubenville.

“We have done some work at the processing plants. The industry is great for business,” said Robert Gribben, vice president of Grae-Con.