Dominion transfers plant to Blue Racer

September 5, 2013

Shale Play

WHEELING, W.Va. - Blue Racer Midstream is now officially the owner of the Natrium Natural Gas Processing and Fractionation Plant, as part of a $1.5 billion deal with Dominion Resources.

Officials announced late last year Natrium facility - originally a $500 million project - would become part of Blue Racer, a partnership between Dominion and Caiman Energy.

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"Bringing Natrium online, transferring ownership to Blue Racer and initiating expansion plans are important milestones for Blue Racer, Utica producers and the region's economy," said Thomas F. Farrell II, chairman, president and chief executive officer of Dominion. "The Utica Shale has tremendous potential to provide jobs and revenue for the people of Ohio, West Virginia and Pennsylvania, and we're excited about playing a role in that."

"With 500 miles of gathering pipeline and significant processing and fractionation capacity already up and running, Blue Racer's assets are uniquely situated to handle rich-gas volumes from all areas of the Utica Shale." said Blue Racer Chief Executive Officer Jack Lafield, who maintains the same position with Caiman.

Despite making the deal for Natrium, Richmond, Va.-based Dominion earned $202 million from April through June, down from $258 million collected during the same time period in 2013.

Farrell said some of the losses were due to "lower contributions from producer services." Blue Racer processes gas for numerous companies, including Chesapeake Energy, Chevron and Noble Energy.

"Despite the challenging quarter, we remain focused on delivering 5 percent to 6 percent earnings per share growth this year," Farrell said.

At the Natrium plant, once the wet Marcellus and Utica shale gas travels to the plant, the ethane, butane, propane and other natural gas liquids will be separated from the dry methane gas so all the products can be marketed individually.

Upon separation from the gas stream, the propane and butane will be kept in tanks on the Natrium site to be marketed. This cannot be done with ethane because of the product's volatility, so Blue Racer plans to ship much of this product for cracking along the Gulf Coast or in Canada.

Workers have also installed railroad lines that will connect the Natrium plant to the CSX Corp. line, which is part of the historic Baltimore & Ohio Railroad. The company will use rail service to move its product.

Some residents, as well as officials with the West Virginia Division of Air Quality, have expressed concerns about natural gas flaring at the Natrium site. According to the National Geophysical Data Center, flaring is a widely used practice for the disposal of natural gas in areas where there is no infrastructure to make use of the gas.

These officials believe the practice unloads unnecessary amounts of carbon emissions into the atmosphere.

Dominion officials emphasize they will only flare off excess gas when it is absolutely necessary.



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