HOUSTON, July 9, 2012 /PRNewswire/ -- NiSource Gas Transmission and Storage's (NGT&S) Midstream & Minerals Group, LLC (MMG) and its various subsidiaries today announced they have entered into definitive agreements with affiliates of Hilcorp Energy Company ("Hilcorp"), a privately owned oil and gas exploration and development company based in Houston, Texas, to develop the hydrocarbon potential on a significant acreage block in the Utica/Point Pleasant Shale formation in northeast Ohio and western Pennsylvania, and to construct new gathering pipeline infrastructure and natural gas liquids (NGL) processing facilities to support natural gas production in the same region.
As part of the upstream joint venture, NiSource will combine its leasehold acreage in northeast Ohio with Hilcorp's current leasehold to form a significant acreage block in the Utica/Point Pleasant Shale formation in northeast Ohio and western Pennsylvania. Hilcorp will serve as the operator and manage the development of the combined acreage. NiSource will be a non-operating working interest owner in the project.
The newly formed midstream joint venture, Pennant Midstream, LLC, will construct an initial 50 miles of wet gas gathering pipeline facilities in northeast Ohio and western Pennsylvania with a capacity of 400 million cubic feet (mcf) per day. In addition, Pennant will build a natural gas processing complex with an initial 200 mcf per day of cryogenic gas processing capacity along with an associated residue line in Ohio to process gas for the upstream joint venture and other interested parties. The initial processing plant is set to be delivered in July of this year. The gathering system and processing complex, which will be operated by NiSource Midstream Services, are expected to be in-service by the third quarter of 2013. Pennant is reviewing several options with various parties for fractionation, including development of its own facility.
"This partnership demonstrates that NiSource is well-positioned and committed to providing the midstream services required by producers across the liquids-rich eastern Ohio and western Pennsylvania Utica Shale play," said Jimmy D. Staton , executive vice president and NiSource Gas Transmission & Storage group CEO. "NiSource has a longstanding commitment to economic growth and job creation in the region and has been serving the citizens of Ohio and Pennsylvania for more than a century. We look forward to expanding our legacy through this partnership."Hilcorp's Chairman and CEO, Jeff Hildebrand , said, "We are pleased to partner with NiSource to develop gathering and processing options for producers early in the Utica Shale wet gas horizon, which they will build and operate. We are equally excited about the opportunity to develop their acreage position, along with our own extensive Utica Shale acreage." Joseph A. Blount, Jr. , NiSource Midstream & Minerals Group's president & COO, commented, "These two joint ventures with Hilcorp allow us to maximize the value of our acreage by leveraging Hilcorp's widely recognized expertise in hydrocarbon exploration and development, while also providing a great foundation from which to provide midstream services and solutions, including gathering, compression, processing and liquids handling for other Utica producers in eastern Ohio and western Pennsylvania." Engineering and construction plans are already in progress, and community outreach will begin immediately. Hilcorp and NiSource will work closely with individual surface rights owners and community officials regarding the production process and timing, as well as lease specifics. Questions can be directed to the toll-free project phone number: 1-888-499-3450.