Chesapeake Energy Corporation Announces Partnership With M3 Midstream LLC And EV Energy Partners, L.P. To Build The Largest Integrated Midstream Service Complex In Eastern Ohio For Approximately $900 Million
Chesapeake Energy Corporation (NYSE:CHK) today announced the execution
of definitive agreements to build the largest integrated midstream
service complex in eastern Ohio.
Chesapeake Energy Corporation (NYSE:CHK) today announced the execution of definitive agreements to build the largest integrated midstream service complex in eastern Ohio. Chesapeake, through affiliates of its wholly owned subsidiary, Chesapeake Midstream Development, L.P. (CMD), has entered into a partnership with M3 Midstream LLC (Momentum) and EV Energy Partners, L.P. (NASDAQ:EVEP) to develop the midstream services complex. The complex will provide necessary infrastructure to process natural gas and natural gas liquids (NGL) in the liquids-rich Utica Shale play in eastern Ohio. The complex will consist of natural gas gathering and compression facilities constructed and operated by CMD, as well as processing, NGL fractionation, loading and terminal facilities constructed and operated by Momentum. The state-of-the-art cryogenic processing facility will be located in Columbiana County and have an initial capacity of 600 million cubic feet per day. NGLs will be delivered to a central NGL hub complex in Harrison County that will feature an initial NGL storage capacity of 870,000 barrels and fractionation capacity of 90,000 barrels per day, as well as a substantial rail-loading facility. The partnership plans to invest approximately $900 million over the next five years with the majority of the capital invested in the first two years. The current ownership structure of the partnership is 59% by affiliates of CMD, 33% by Momentum and 8% by EVEP. Total E&P USA, Inc., Chesapeake’s 25% joint venture partner in the Utica Shale wet gas acreage, has an option to participate in the project, which may proportionately reduce the ownership of CMD affiliates and EVEP to 44% and 6%, respectively. Significant engineering and procurement has already begun for the project with the first cryogenic processing and fractionation plants scheduled to be in service by the second quarter of 2013. Mike Stice, CMD’s President, commented, “We are pleased to partner with Momentum and EVEP to build a critically important link in the value chain for the rapidly developing Utica Shale play. This partnership will allow CMD to focus on building the extensive gathering and compression requirements of the system, while leveraging the expertise of Momentum to build and operate the processing and fractionation facilities. In addition, the scope of this project will provide an economic boost for companies and residents throughout Ohio as well as hundreds of high-quality, well-paying, new jobs for Ohioans. We look forward to joining with the citizens of Ohio to provide superior service and a high quality, reliable stream of natural gas and NGL products to our customers.”