March 14, 2012 / 12:41 AM / 5 years ago

Chesapeake, partners to build $900 million midstream complex

(Reuters) - Chesapeake Energy (CHK.N) said it will partner with M3 Midstream and EV Energy Partners (EVEP.O) to build a $900 million complex that will process natural gas and natural gas liquids (NGLs) from the emerging Utica shale field in eastern Ohio.

The complex will comprise natural gas gathering and compression facilities constructed and operated by Chesapeake unit Chesapeake Midstream Development (CMD), as well as processing, NGL fractionation, loading and terminal facilities.

The processing facility, to be located in Columbiana County, will have an initial capacity of 600 million cubic feet per day, Chesapeake said in a statement.

The second-largest U.S. producer of natural gas said NGLs will be delivered to a central hub in Harrison County that will have an initial storage capacity of 870,000 barrels and fractionation capacity of 90,000 barrels per day.

Fractionation refers to separating various hydrocarbons in an NGL stream by heating them to different boiling points.

Chesapeake said the investment in the complex will be made over the next five years, with the majority of that spent in the first two years.

The partnership is 59 percent owned by affiliates of CMD, 33 percent by independent midstream energy company M3 Midstream and the rest by EV Energy.

French oil group Total SA's (TOTF.PA) Total E&P USA Inc, which is Chesapeake's 25 percent joint venture partner in the Utica Shale wet gas acreage, has an option to buy into the project.

Reporting by Krishna N Das in Bangalore; Editing by Supriya Kurane

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