MarkWest Energy Partners Moving Forward In Marcellus Shale

By Eric Fox | September 14, 2011 AAA

MarkWest Energy Partners, L.P. (NYSE:MWE) is heavily involved with the building of infrastructure to process and transport the torrential flood of ethane expected to be produced from onshore domestic oil and gas basins.

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Marcellus Shale
These infrastructure projects are targeting the rapid production growth coming from the Marcellus Shale and consist of various pipelines, gas gathering, processing, and fractionation equipment and facilities. The completed infrastructure will be able to handle production of more than one billion cubic feet per day of natural gas.

MarkWest Energy Partners, L.P. is involved with the project through MarkWest Liberty Midstream & Resources, LLC, a joint venture set up between the company and the Energy & Minerals Group. Sunoco Logistics Partners L.P. (NYSE:SXL) is also involved with several of the pipelines under construction.

MarkWest Liberty has a number of existing facilities in western Pennsylvania where the company processes and transports natural gas. These facilities at Houston and Marysville are being expanded to handle ethane and increase capacity. The company also has two new processing facilities under construction in West Virginia.

Mariner Pipeline Project
The Mariner Project consists of Mariner West, which will deliver ethane into the Canadian petrochemical market, and Mariner East, which will transport ethane to a shipping terminal on the east coast to satisfy demand from the Gulf Coast and international markets.

Mariner West will involve the construction of a 40 mile pipeline designed to transport liquid ethane from the Houston plant. The pipeline will connect to an existing pipeline operated by Sunoco Logistics Partners L.P., which will bring the ethane into Ontario, Canada. The project will be finished by mid 2013 and have capacity of 50,000 barrels per day.

Mariner East involves a similar concept in the other direction, with MarkWest Liberty building a 45 mile ethane pipeline to connect to the Sunoco system. Sunoco Logistics Partners L.P. is planning to convert an existing pipeline to handle ethane and build other equipment needed to accommodate ethane storage and delivery. Mariner East will have the same capacity and expected completion date as Mariner West.

Sunoco Logistics Partners L.P. has seen strong demand for this service and recently concluded a successful open season for Mariner West, where it received enough commitments to proceed with construction.

Other Projects
MarkWest Liberty and Sunoco Logistics Partners L.P. are not alone in building out new infrastructure. Enterprise Products Partners L.P. (NYSE:EPD), Anadarko Petroleum (NYSE:APC) and Enbridge Energy Partners, L.P. (NYSE:EEP) recently announced that the companies would build the Texas Express Pipeline along with two new natural gas gathering systems.

The Texas Express Pipeline will serve a number of areas in the United States, including the Granite Wash and Permian Basin. The initial capacity of the pipeline system will be 280,000 barrels per day.

El Paso (NYSE:EP) and Spectra Energy (NYSE:SE) are building the Marcellus Ethane Pipeline System, which would transport ethane from Pennsylvania and West Virginian down to the Gulf Coast area. The project is expected to be completed by 2014.

The Bottom Line
MarkWest Energy Partners is one of the leaders in building infrastructure to handle the processing and transportation of growing ethane production coming out of the Marcellus Shale. Investors should look at midstream players as a way to invest in the domestic oil and gas drilling boom. (For additional reading, take a look at our Oil And Gas Industry Primer.)

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