Regency Energy Partners LP (RGP) and American Energy – Midstream, LLC (AE-MidCo), have entered into a joint venture agreement for the construction and operation of Regency’s Utica Ohio River gas project in the United States.
In addition, RGP and American Energy– Utica, LLC (AEU) will enter into a gathering agreement for gas produced from the Utica Shale in eastern Ohio by AEU.
Regency and AEU will contribute all previously signed agreements to the joint venture. These agreements include volume commitments and large acreage dedications. As a result, Regency and AE-MidCo will upsize the project to accommodate over 2 billion cubic feet per day (Bcf/d) of firm volume commitments. These commitments represent the majority of the projected volumes in the 52-mile footprint of the pipeline.
The upsized project will include construction of a 52-mile, 36-inch gathering trunkline that will be capable of delivering up to 2.1 Bcf/day to Rockies Express Pipeline (REX) and Texas Eastern Transmission on the southern end of the line. Additionally, there is the potential to connect to the interstate grid on the northern end of the trunkline which would increase overall system deliverability to 3.5 Bcf/day. The project will also consist of the construction of 25,000 horsepower of compression at the REX interconnect. The full project is expected to be completed in the third quarter of 2015.
Art Cantrell, RGP senior vice president, eastern region, stated:
We are excited about the strong growth potential of the Utica Shale, and this project will be a main takeaway option for Utica development, providing interconnectivity with major interstate pipelines in 2015. We are also pleased to partner with AEU, who has a very strong, accomplished management team with a demonstrated track record of success and has committed significant volumes to this project.
Total project costs are expected to be approximately US$500 million, with Regency contributing 75%, and AE-MidCo contributing 25%. Regency will construct and operate the project on behalf of the joint venture.