EVEP to expand Utica East Ohio gas-processing capacity

EV Energy Partners announced plans Monday to expand the capacity of the Utica East Ohio natural gas-processing system.

The system, comprising plants and pipelines in Columbiana, Carroll and Harrison counties, will increase in capacity from 800 million cubic feet per day to 1 billion cubic feet per day, Houston-based EV Energy Partners announced in a conference call with investors.

The expansion is needed to handle natural gas production from new customer American Energy-Utica, and increased commitments from joint-venture partners Chesapeake Energy, Total Gas & Power North America and EnerVest, which is the controlling member of EV Energy Partners.

“Now that the mid-stream bottleneck is being addressed, volumes from the wet-gas window in Carroll and surrounding counties continue to come online and grow almost each week with well tie-ins,” said John B. Walker, executive chairman of EV Energy Partners.

The company owns a 21 percent stake in Utica East Ohio. Access Midstream owns 49 percent and M3 Midstream owns 30 percent.

Utica East Ohio will expand its processing facility at Leesville and extend a high-pressure pipeline from the Harrison Hub in Scio to Cardinal Gas Services’ Archer Compression Facility in Harrison County. Butane and propane storage will increase at Scio as well.

With increased efficiency, actual production capacity can be 10 percent to 20 percent higher than “nameplate” capacity, Walker said.

Utica East Ohio also has signed a deal to provide gathering, compression and dehydration services for American Energy-Utica in a 145,000-acre area of mutual interest that will entail building 50 miles of gathering lines. American Energy-Utica was started by former Chesapeake head Aubrey McClendon.

EV Energy Partners also owns a 9 percent interest in Cardinal Gathering Services, which collects natural gas from all of the wells drilled in the 660,000-acre Chesapeake, Total and EnerVest joint-venture. So far, 495 wells have been drilled, of which 274 are producing. The rest are awaiting completion or connection to a pipeline, and Chesapeake plans to drill 180 wells this year, Walker said.

Projections call for the joint-venture to produce up to 800 cubic feet per day by the end of the year, and EV Energy Partners’ strategy for selling its wet-gas acreage coincides with increased production, he said.

The Utica Shale’s oil window through most of Stark, Tuscarawas and Guernsey counties has an estimated 5.5 million barrels of oil in place per 140-acre well, making it similar to other oil shales, said President and CEO Mark Houser.

“The challenge in the oil window appears to be fracture design and minimizing reservoir damage upon completion,” he said.

EVEP is watching the results of its joint-venture Parker well with Chesapeake in Tuscarawas County’s Perry Township, and plans to drill one or two oil-window wells of its own this summer, Houser said.

EVEP’s total natural gas and oil production increased 6 percent year over year to 10.8 billion cubic feet of natural gas, 265,000 barrels of oil and 550,000 barrels of natural gas liquids, or 174.7 million cubic feet equivalent per day.

The company ended the quarter with a net loss of $6.3 million or 14 cents per share.