Independent producers Rice Energy and Gulfport Energy said Thursday the companies are forming a joint venture to develop midstream assets to support Gulfport’s dry gas Utica Shale development in eastern Ohio.
Rice and Gulfport plan to invest roughly $520 million to develop gathering and compression assets and $120 million for water assets within the JV over the next six years.
Initial construction of the system is expected to begin immediately and first deliveries are planned for mid-2016.
“We are excited about furthering our midstream relationship with Gulfport across their position in the core of the Ohio Utica Shale,” said Daniel J. Rice IV, CEO of Rice.
The JV will be supported by long-term, fee-based service agreements with Gulfport, Kallanish Energy understands. Rice will own 75% of the JV and be responsible for constructing and operating the JV’s assets.
“Gulfport has a strong history with Rice in the Utica Shale and we are excited to expand our relationship by creating further alignment with one of our midstream providers,” said Michael G. Moore, Gulfport’s CEO.
Moore added the JV will enable Gulfport to leverage Rice’s expertise as a midstream services provider and will allow Gulfport to take part in the potential drop down strategies for the joint venture and its investments.
The JV’s assets include a dry gas gathering system with capacity to gather over 1.75 billion cubic feet per day (Bcf/d) of natural gas consisting of roughly 165 miles of high and low pressure 12-inch to 30-inch gathering pipelines with multiple interconnections to interstate pipelines, including the Rockies Express, Energy Transfer’s Rover, TETCO and Dominion East Ohio.
Also part of the JV is a fresh water distribution system designed to deliver fresh water to pads for completion activities.
Under the terms of the agreement, Gulfport will own the remaining 25% of the JV and dedicate approximately 77,000 leasehold acres, including the acreage recently acquired in its Paloma Partners III and American Energy–Utica transactions.
In addition, Gulfport will also contribute to the JV an existing 11-mile gas gathering pipeline and a 339.65 million cubic feet per day (MMcf/d) TETCO interconnect, which are both located in Monroe County, Ohio.
Rice and Gulfport said they plan to pursue third-party gas gathering and water services opportunities within a 340,000-acre area of mutual interest that will cover portions of eastern Belmont County and Monroe County, Ohio.
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