Regency, American Energy Join on $500M Pipeline

DALLAS -- Regency Energy Partners announced Thursday that it has secured a joint venture agreement with American Energy–Midstream LLC for the construction and operation of Regency's $500 million Utica Ohio River project. 

Regency and American Energy Utica LLC, a subsidiary of former Chesapeake CEO Aubrey McClendon's American Energy Partners, will also enter into a gathering agreement for gas AEU produces in the Utica shale.

“We are excited about the strong growth potential of the Utica shale, and this project will be a main takeaway option for Utica development, providing interconnectivity with major interstate pipelines in 2015,” said Art Cantrell, Regency senior vice president,in a prepared statement. “We are also pleased to partner with AEU, who has a very strong, accomplished management team with a demonstrated track record of success and has committed significant volumes to this project.”

The project will include construction of a 52-mile, 36-inch gathering trunk line capable of delivering up to 2.1 billion cubic feet a day to Rockies Express Pipeline and Texas Eastern Transmission at the southern terminus. There is also the potential to connect to the interstate grid on the northern end of the trunk line that would increase overall system deliverability to 3.5 billion cubic feet per day.

Regency and AEU will assign all previously signed agreements to the joint venture. These agreements include volume commitments and large acreage dedications. As a result, Regency and AE-MidCo will expand the project to accommodate over two billion cubic feet per day of firm volume commitments. These commitments represent the majority of the projected volumes in the 52-mile footprint of the pipeline.

The project will also consist of the construction of 25,000 horsepower of compression at the Rockies Express interconnect. The full project is scheduled for completion in the third quarter of 2015.

McClendon established American Energy last year after he was forced out of the Chesapeake.

Total project costs are projected to be approximately $500 million, with Regency contributing 75%, and AE-MidCo contributing 25%. Regency will construct and operate the project on behalf of the joint venture.

Published by The Business Journal, Youngstown, Ohio.
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