MarkWest, Antero Midstream form Marcellus joint venture

MPLX LP wholly owned subsidiary MarkWest Energy Partners LP and Antero Midstream Partners LP have formed a strategic joint venture to support development of Marcellus shale acreage in the rich-gas corridor of West Virginia.

Ownership interest in the JV is split 50-50 between MarkWest and Antero Midstream. It’s supported by a long-term, fee-based agreement with Antero Resources Corp., Denver.

As part of the deal, Antero Midstream has agreed to release its 195,000-gross-acre processing dedication from Antero Resources to the JV, increasing the Marcellus area dedication to MarkWest to 360,000 gross operated acres from 167,000. The additional dedicated acreage includes Antero Resources’ core Marcellus position in Tyler, Wetzel, and Ritchie counties.

To support Antero Resources’ production growth, the JV will expand processing systems at its Sherwood complex in Doddridge County. The Sherwood complex began operations in October 2012 and has six cryogenic processing facilities totaling 1.2 bcfd of capacity.

Ongoing development of gas processing infrastructure at the Sherwood complex includes three JV processing facilities totaling 600 MMcfd of incremental capacity for Antero Resources. The JV expects to commence operations of two of the facilities during this year’s first and third quarters, and to start operations of the third plant during first-quarter 2018.

In addition to the three new processing facilities, the JV is considering development of up to another eight processing facilities to support Antero Resources that would be at both the Sherwood complex and a new location in West Virginia.

MarkWest will continue to construct and operate all processing facilities installed to service Antero Resources’ production and will also retain full ownership of the first six processing facilities at the Sherwood complex.

The JV also will support Antero Resources’ NGL production growth with fractionation systems at the Hopedale complex in Harrison County, Ohio. The complex currently has three units providing 180,000 b/d of propane-plus fractionation capacity.

The JV is investing in 20,000 b/d of existing fractionation capacity at the Hopedale complex, and has an option to invest in future fractionation expansions at the complex subject to the production of incremental NGLs from the JV’s processing facilities.

MarkWest and its affiliates will continue to fully own and operate all NGL pipelines, rail, and marketing infrastructure associated with the Hopedale complex. MarkWest also will continue to fully own and operate all fractionation facilities and related NGL infrastructure in the Marcellus.

MarkWest will initially contribute existing assets to the JV consisting of the three processing facilities currently under construction at the Sherwood complex, as well as associated infrastructure related to the operation of these facilities.

Antero Midstream will initially contribute $155 million for its allocated share of processing assets at the Sherwood complex and ownership of fractionation capacity at the Hopedale complex. Going forward, it is expected that MarkWest and Antero Midstream will each contribute 50% of the future capital investments for the JV.