Williams, Shell plan midstream JV for northwest Pennsylvania

14:51 PM | April 12, 2013 | Clay Boswell

Williams Partners (Williams; Tulsa, OK) has announced an agreement to partner with Shell in a midstream joint venture that will provide services for gathering and processing gas extracted from the Marcellus and Utica shale plays in northwest Pennsylvania.

The venture, Three Rivers Midstream, will invest in infrastructure for both wet- and dry-gas handling, including a 200-million cu ft/day  cryogenic gas processing plant. Williams expects the plant to go on line by the second quarter of 2015, with expansions to follow as the business grows.

Armstrong: A major supply hub
“Similar to our strategy of creating a significant supply hub in the dry-gas area of northeast Pennsylvania, Three Rivers will create a major supply hub in northwest Pennsylvania, but with the added benefit of large-scale [natural gas liquid] pipeline infrastructure and expanded market options to support wet-gas production in this area,” says Alan Armstrong, CEO of Williams’ general partner.

Three Rivers has signed a long-term, fee-based, dedicated gathering and processing agreement for Shell’s production in the area, and it plans to pursue gathering and processing agreements with other producers in northwest Pennsylvania and northeast Ohio.

Armstrong expects Three Rivers to connect with two major developments proposed for Pennsylvania: Shell’s ethylene cracker and a Williams-Boardwalk jv that aims to develop the Bluegrass Pipeline system. The Bluegrass pipeline, which would deliver Marcellus and Utica liquids to the Gulf Coast and export markets, is targeting a late 2015 in-service date.

“This new joint venture builds on our strategy of creating large-scale infrastructure solutions that will provide Shell and other producers with access to the best markets for their natural gas and natural gas liquids, whether they be in the Northeast or the Gulf Coast,” Armstrong says.

Williams says it will initially own substantially all of Three Rivers Midstream and operate the assets, but Shell will have the right to invest capital and increase its ownership prior to mid-2015.

Williams expects its share of initial capital expenditures on the Three Rivers plant, excluding the gathering system, to be approximately $150 million.