MarkWest Energy buys Granite Wash assets in Texas, Oklahoma

MarkWest Energy Partners LP, Denver, has bought midstream assets in the Anadarko basin from a wholly owned subsidiary of Chesapeake Energy Corp. for $245 million.

The assets consist of a 200-MMcfd cryogenic gas processing plant—Buffalo Creek—and 22 miles of gas gathering pipeline in Hemphill County, Tex., and about 30 miles of rights-of-way associated with future construction of a high-pressure trunk line. Additional assets consist of an amine treating plant and a 5-mile gas gathering pipeline in Washita County, Okla.

The Buffalo Creek plant and associated trunk line will be in service in early 2014. Producing formations in the Anadarko basin associated with these assets include the Granite Wash and Hogshooter along with several other liquids-rich zones the company announcement failed to specify.

At the same time, MarkWest closed long-term agreements with Chesapeake for gas gathering, compression, treating, and processing. As part of the processing agreement, Chesapeake has dedicated about 130,000 acres throughout the Anadarko basin, said the MarkWest announcement.

The company said it anticipates initial gas volumes from Chesapeake of about 50 MMcfd, increasing to more than 250 MMcfd by 2017.

To support Chesapeake’s drilling program, MarkWest said it expects to invest about $90 million over the next 5 years for completion and expansion of associated infrastructure. Most of the capital will be spent over the next 2 years to complete construction of the Buffalo Creek plant and the high-pressure trunk line to connect various low-pressure gas gathering systems that are owned and operated by third parties.

Once completed, these assets will integrate with MarkWest’s existing operations in the Granite Wash, which include gas gathering systems totaling 340 MMcfd of throughput capacity and the 235-MMcfd Arapaho processing complex in Custer County, Okla.