Rice Energy Inc. has announced that its wholly owned subsidiary, Rice Midstream Holdings LLC, has signed a letter of intent with Gulfport Energy Corporation to form a midstream joint venture to develop natural gas gathering and water services assets to support Gulfport's dry gas Utica Shale development in eastern Belmont County and Monroe County, Ohio. The joint venture will be supported by long-term, fee-based service agreements with Gulfport.
Rice will own 75% of the joint venture and be responsible for constructing and operating the JV's assets:
- A dry gas gathering system with capacity to gather over 1.8 million Dth/d of natural gas consisting of approximately 165 miles of high and low pressure 12 in. – 30 in. gathering pipelines with multiple interconnections to interstate pipelines including: Rockies Express, ET Rover, TETCO and Dominion East Ohio.
- Approximately 50 000 horsepower of compression for gathering and delivery into various downstream interstate pipelines.
- 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 joint venture and dedicate approximately 77 000 leasehold acres, including the acreage recently acquired in its Paloma Partners III, LLC and American Energy – Utica, LLC transactions. In addition, Gulfport will also contribute to the joint venture an existing 11-mile gas gathering pipeline and a 350 million Dth/d TETCO interconnect, which are both located in Monroe County.
The joint venture significantly increases Rice's leading midstream position in the core of the Utica Shale. By leveraging its existing footprint, Rice is able to grow its third-party business and expand its relationship with Gulfport across Gulfport's premier position in the prolific dry gas Utica Shale. Rice and Gulfport plan to pursue third-party gas gathering services opportunities within a 340 000-acre area of mutual interest that will cover portions of eastern Belmont County and Monroe County, Ohio.
Commenting on the announcement, Daniel J. Rice IV, Chief Executive Officer, said, "We are excited about furthering our midstream relationship with Gulfport across their position in the core of the Ohio Utica Shale. This joint venture will be one of the premier midstream systems in the prolific dry gas core of the Utica and adds to Rice's attractive inventory of potential drop down candidates to Rice Midstream Partners."
Edited from press release by Angharad Lock