A program of the West Virginia Oil & Natural Gas Association

MarkWest to invest over 200M in Sherwood Plant


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Darlene J. Swiger/ The Exponent Telegram 

MarkWest employees look over plans for sizing pipelines for Doddridge County area. From left are: Dustin Vincent, Project Manager; Jason Davis, Senior Designer; and Josh Sill, Facility Engineer.

 

MarkWest, a wholly-owned subsidiary of MPLX, has expanded its operations in West Virginia and continues to grow, with more than $200 million in construction underway in Doddridge County and more than $100 million in planned upgrades in Marshall County.

The company currently has seven separate processing plants in two states, one being de-ethanization, and an ethane fractionation plant has been added at the Sherwood location along U.S. 50 in Doddridge County, Operations General Manager Jeff Randolph said.

“The Sherwood complex has seven plants at the expansive facility, including fractionation operation. Our other West Virginia sites are Mobley, with five plants, and Majorsville, with seven,” he said. “Our first plant at Sherwood went into service in August 2012 to meet Anterodrilling demands.”

MarkWest works with its customers to ensure natural gas extracted from the Marcellus and Utica Shales can pass through pipelines. It removes liquids from the region’s natural gas and gets it to their customers’ markets.

“MarkWest has been in West Virginia 20 years. Our office opened in 2013 at White Oaks business park, Bridgeport, when the Marcellus Shale development started. We’ve added a significant number of employees and expanded office space,” Randolph said. “We have 174 employees throughout the state, with 50 at Sherwood and 20 in Bridgeport.”

The biggest project in 2016 was a $120 million addition to the Mobley plant in Wetzel County, adding 200 million standard cubic feet per day and 10,000 barrels of ethane daily, he said.

“We are in the process of a $200 million upgrade at Sherwood, with completion expected this year. We have 1.2 billion standard cubic feet of gas per day and separate 40,000 barrels of ethane,” Randolph said. “We have 400 million standard cubic feet per day under construction at this time and then will be able to process 1.6 billion cubic feet per day.”

MarkWest does not have a fractionization facility planned for West Virginia, but isn’t ruling one out, based on future customer demand.

“It doesn’t mean we won’t work with customers if the demand is there,” he said. “The proposed pipelines could help the industry grow. Pipeline expansions will help us get access to markets outside of West Virginia.”

Also in 2017, the Majorsville facility in Dallas, located in Marshall County, plans to add 40,000 barrels a day of ethane at a cost of $110 million.

“In Doddridge County, we’re currently building a $4 million new administration building on the site at Sherwood,” he said. “The overall head count is up. We’re out of storage. We also have additional equipment, processing capacity and growth in general, making the new office essential.

“It has been an incredible success story to be where we are in 2017 with 1.6 billion cubic feet per day. We are one of the largest facilities in the northeast. It speaks to the customers, developers and employees to put it together in such a short time.”

The Sherwood Plant has made a significant financial impact in Doddridge County, and is expected to do so for many years.

Doddridge Commission President Greg Robinson said it has had a positive impact on the tax dollars.

“The one thing that they did is took advantage of an incentive that was a state law that gave a multi-year tax break. They were allowed to pay only a certain percentage of the taxes. This particular plant met the necessary qualifications,” Robinson said. “It has still added tax dollars to the county. The administration building and upgrades to the plant will add to our tax base and after the 10-year time frame, it will have a more dramatic impact on the county.”

Robinson said all the development that has occurred in the county can be attributed to the oil and gas business. Once they started drilling gas wells, pipelines and building MarkWest plants, the county tax base grew.

“When I become a commissioner four years ago, we were a Class 6 county, and now Doddridge County is a Class 2 due to all of this development,” he said. “That is between $1.5 (billion) and $1.99 billion based in total assessed valuations.”

The increased tax revenue has enabled commissioners to renovate the courthouse at the cost of about $2.5 million, replace sidewalks and pave parking lots and streets around the courthouse.

“We’re leasing a library building, and we’re in the process of looking at an annex. We’ve got the new water line extension from Smithburg past the Doddridge County Park, and part of that was a study that the PSD did looking at bringing in water from surrounding counties to serve the citizens of Doddridge County,” he said. “There are a lot of things we’ve been wanting to do for a long time, and some of these are coming to fruition now.

“As a commissioner, you want to be able to see the county grow and offer opportunities to the citizens and that is what we are working toward. We hope that the good outweighs the bad in this type of economic development.”

In the Marcellus play, MarkWest is the No. 1 midstream company in processing volumes in West Virginia and the entire Marcellus, he said.

“We work with specific customers. Our niche is we fit Antero, EQTSouthwesternCNXChevronRange Resources, Eureka Hunter. They dictate where the market goes. We get it to the markets they want to get it in,” Randolph said.

Randolph joined MarkWest in 2014 and is a Clarksburg resident.

“It is an exciting opportunity to join the team,” he said. “My family is here. We reside in the North View section.”

Marathon Petroleum Corp. and MarkWest merged as general partners in December 2015, resulting in MarkWest, the second-largest processor of natural gas in the United States and largest processor and fractionator in the Marcellus and Utica Shale plays, becoming a wholly owned subsidiary of MPLX, a rapidly growing crude oil and refined products logistics partnership sponsored by Marathon Petroleum Corp. The combination creates one of the largest master limited partnerships.

“We are pleased the overwhelming majority of MarkWest unit holders supported the combination, and we look forward to the significant opportunities of the combined partnership,” said Gary R. Heminger, MPLX chairman and chief executive officer. “This combination creates a large-cap diversified midstream partnership with an extraordinary growth profile, underpinned by MarkWest’s large organic growth backlog and MPC’s large inventory of MLP-eligible assets.”

The 2016 adjusted assets of MPLX are $1.42 billion with a distributable cash flow of $1.14 billion with a distribution growth rate of 13 percent last year. Affirmed 2017 distribution growth is forecast at 12-15 percent and a double-digit distribution growth rate for 2018, according to the fourth quarter earnings presentation.

 


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