American Oil and Gas Reporter - July 2015 - 118

SpecialReport: Marcellus/Utica Update

Marcellus/Utica Shale operator Rice Energy created Rice Midstream Partners LP as a
master limited partnership in 2014 to own and operate its midstream assets. "Doing our
own gathering allows us to control our destiny and enhance our economic growth potential," says Chief Executive Officer Daniel Rice, who mentions that 15 percent of the
gas moving through Rice's system is from third parties.

ducing customers, both for natural gas
and purity products. Multimodal connectivity is available at Natrium through
pipeline, trucking, barging on the Ohio
River, or rail," he states.
"Ethane has to be kept cold, so Blue
Racer has capacity on the ATEX ethane
pipeline that runs to petrochemical plants
on the Gulf Coast," Arata continues. "It
also has capacity on the Mariner East II
project to the Marcus Hook terminal in
Philadelphia to batch ship propane and
butane."

Strategic Advantage
Arata predicts development of the
Utica is about to take off. "The rock in
the Utica is great," he enthuses. "The
core of the rich part of the Utica is better
than anything in the southwestern Pennsylvania Marcellus. People will be surprised how fast the Utica develops."
One advantage Blue Racer has, according to Arata, is the company's gigantic
pipeline footprint in the region.
"The hardest asset to build is lengthy,
large-diameter transmission pipeline," he
offers. "It is hard to get rights of way,
and you have to get the necessary customers to commit to build the lines. Dominion already had long-haul pipelines
in place, so that is a big strategic advantage
for us. We can connect anyone in the
Utica to any of our processing facilities."
Arata says Blue Racer also has com-

pleted constructing a 20-inch, 17-mile
pipeline that connects its Berne facility
to Washington County, Oh., in the very
southern part of the Utica.
"Our Washington County Connector
can handle up to 400 MMcf/d," he states.
"We are the only company that can get
rich gas out of Washington County, and
we are well positioned to be the midstream
provider of choice in the area. People
weren't sure if the Utica was going to
extend that far south, but we are seeing
some very good results in this area. It
took risk capital to build that pipeline,
but we are confident it will be a franchise
position for us."
Handling Its Own Gas
CONSOL's and Noble's interests in
CONE offer an advantage to operators
who have predominately used unaffiliated
third parties. The development of new
formations within the joint venture's footprint was anticipated, and as such, provisions are in place already for gathering,
says COO Fink.
"We are primarily in Greene, Washington and Westmoreland counties in
Pennsylvania, and Marshall and Doddridge
counties in West Virginia," Fink says.
"CONE gathers, compresses and dehydrates gas produced at the well and redelivers it to long haul transmission systems,
or in the case of wet gas, redelivers it to
MarkWest Energy Partners, Blue Racer,
and Williams to process."

118 THE AMERICAN OIL & GAS REPORTER

What will the emergence of the new
"monster" Utica wells in the area mean
to CONE's need to build out its gathering
system? "We are working with both
CONSOL and Noble as they delineate
their acreage, communicating areas where
advantages exist," says Fink. "CONSOL
and Noble both have drilled deep Utica
wells that are awaiting completion. We
are paying close attention to those results.
First Utica production is expected in the
third and fourth quarters."
He says the delineation wells are precursors to larger-scale Utica development.
"These wells will provide the data necessary for CONSOL and Noble to build
development plans, but also will provide
critical information for CONE to modify
facilities or design new ones," Fink remarks. "We are being queried already
about where space is available. Cost is
critical, especially with today's price sensitivities."
Fink points out that CONSOL retained
its Utica rights in its Marcellus joint venture with Noble. "The fact CONSOL retained the Utica says it envisioned the
play as important for its future," he
reasons. "It just wasn't quantified. I think
Utica development will be much faster
than the Marcellus."
Oversized Design
Rice Energy is another operating company that built its own midstream system
in the Appalachian Basin.
"Doing our own gathering allows us
to control our destiny and enhance our
economic growth potential," shares Daniel
Rice, CEO for Rice Energy and Rice
Midstream Partners LP. "The top two
priorities for producers today are flow
assurance and access to good markets.
The dry gas gathering system we constructed is oversized and connected to
multiple interstate pipelines."
Rice says this provides enough capacity
not only for Rice Energy's production,
but third party volumes as well. "Our
throughput is growing to more than 1.0
Bcf/d on a system we have designed to
accommodate up to 6.5 Bcf/d in aggregate," he observes. "We are tied into
multiple outlets that give us access to
markets such as the Gulf Coast, Midwest,
Canada, and Mexico.
"We put a lot of time and energy into
making our gathering best in class," Rice
adds. "It is resonating with our peers.
Approximately 15 percent of the gas we
gather is from third parties."

American Oil and Gas Reporter - July 2015

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