EPA director lauds processing complex

KENSINGTON – After touring the Utica East Ohio Buckeye (UEO Buckeye) cryogenic processing complex on Tuesday, Ohio Environmental Protect Agency Director Scott Nally said one of his takeaways was the scale of the plant.

“It’s easy to see on paper,” he said. “But to actually come out and see the scale. The 240-foot (tall) tower that was transported here. The permits to get it here. That’s what you gain an insight to. The safety, the checks and balances, the meters in and out. If they miss something they know it immediately in real time.”

Nally was joined by Columbiana County commissioners and company officials at the plant on state Route 644 that is partially operational.

The complex processes natural gas and natural gas liquids in the liquids-rich Utica Shale play and consists of natural gas gathering and compression facilities constructed and operated by Chesapeake Midstream Development, L.P. (CMD). The plant is on a 170-acre site with 50 to 60 acres currently developed. Sections are still under construction and the state-of-the-art plant is considered “a live facility,” Process Safety Management Donna VanDeman said before the tour.

Construction is aimed at tripling its capacity to it an initially projected 600 million cubic feet per day out put. The plant is currently processing 200,000 million cubic feet of NGL per day and there are 500 on-site employees, mostly in construction, attached to six or seven primary contractors and upwards of 20 subcontractors. The NGL are delivered to a central hub in Harrison County that features a start-up NGL storage capacity of 870,000 barrels, a fractionation capacity of 90,000 barrels per day and a rail spur.

The Columbiana and Harrison county plants are part of an initial $900 million investment that has already been recalibrated to over $1 billion.

“This is a great thing for our county,” said Columbiana County Commission Mike Halleck. “We’re in the best position ever. It started out as millions of dollars and now were talking billions.”

There are two fractionation “trains” up at the Kensington plant – each featuring 170-foot dementhanizer towers. “The first train came up extremely easy, which made it easy to process,” said plant supevisor Grant Hammer of Momentum. He said once the plant is completely on line in 2015, with three trains running, there will be 138,000 volts through its substation.

“There are currently five compressors online,” said Eric Mize, emergency preparedness and public awareness manager for Momentum. “They are all electric-powered 5,000 horsepower motors and 13,800 volts each.”

At full operational capacity the plant will generate an electric bill in the area of $5 to $6 million a month, Mize said.

Nally said visiting a couple of sites in Pennsylvania helped frame important interfacing elements between the Kensington plant and his agency. Before submitting initial permit applications, UEO Buckeye engaged the state EPA to make sure the project would comply with all environmental regulations. The collaboration helped the EPA understand the company’s business needs and issue environmentally protective permits in a timely fashion that facilitated UEO Buckeye’s ambitious construction schedule.

Pointing to the auto industry comeback, Nally said the plastic industry, a major support industry for automakers, is a customer of the petro chemicals that will be processed at UEO Buckeye.

Momentum Construction Coordinator Baron John said Phase II, expected to come on line in a month, will add 200,000 million cubic feet of NGL per day capacity and Phase III construction is just getting under way.

Expected to be completed in May, Phase III will bring the UEO Buckeye plant up to the initial 600,000 million cubic feet of NGL per day capacity it was designed for.

A fourth train could be added at Kensington or Leesville in Carroll County, John said, depending on demand. “There’s room for four on paper,” he said, regarding the Kensington site. “We’re meeting and exceeding expectations. Time is a factor, it will tell. We don’t have the numbers. They’re still drilling.”

Chesapeake Energy, through affiliates of its wholly-owned subsidiary, Chesapeake Midstream Development, L.P. (CMD), and its partnership with M3 Midstream LLC (Momentum) and EV Energy Partners, L.P. (NASDAQ:EVEP) is developing the midstream services complex.

Over the next five years, the partnership plans to invest more than a $1 billion with the majority of the capital invested in the first two years.

The current ownership structure of the partnership is 59 percent by affiliates of CMD, 33 percent by Momentum and eight percent by EVEP.

Total E&P USA, Inc., Chesapeake’s 25 percent 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 percent and 6 percent, respectively.