Range Resources Corporation provides an update regarding the natural gas processing and pipeline infrastructure status of its Marcellus Shale play in Appalachia. In 2008, Range entered into an agreement with MarkWest Energy Partners L.P. to develop certain gas processing and pipeline infrastructure in Pennsylvania. In October 2008, the first phase of the infrastructure was completed, which included a 30 Mmcf per day capacity refrigeration natural gas processing plant, three compressor stations and approximately 25 miles of pipelines in southwestern Pennsylvania. The second phase of the infrastructure includes a cryogenic natural gas processing plant with an additional 30 Mmcf per day of processing capacity, along with three additional compressor stations and 20 additional miles of gathering and pipelines. The cryogenic plant has been completed and is currently undergoing initial start up. In combination with the refrigeration plant, the cryogenic facility now brings Range's total processing capacity in southwestern Pennsylvania to 60 Mmcf per day.
Once the initial start up of the cryogenic plant is completed in the coming weeks, the plan is to divert the natural gas flowing to the refrigeration plant to the cryogenic plant. The objective is to fill the cryogenic plant as soon as practical, since the cryogenic plant is capable of extracting a larger portion of the natural gas liquids from the high Btu Marcellus gas in southwest Pennsylvania. Once the cryogenic plant is fully loaded, the next step will be to turn on previously drilled Marcellus wells to the expanded pipeline system. As additional production is added, such production will then be processed through the refrigeration plant. Range will be systematically tying in new wells and anticipates the refrigeration and cryogenic plants to reach full processing capacity during the third quarter. Range currently has 15 Marcellus wells in various stages of completion, waiting to be turned to production.
The third phase of the infrastructure will be to add an additional 20 Mmcf per day of refrigeration capacity by the end of September, which will increase total processing capacity to 80 Mmcf per day. Also in process is the construction of a 120 Mmcf per day cryogenic facility expected to be fully operational in January 2010. Simultaneously, additional compression and pipelines are being added as Range continues to drill new Marcellus Shale wells throughout 2009.
Commenting on the announcement, John Pinkerton, Range's Chairman and CEO, said,
"We commend MarkWest for getting the first cryogenic plant up and running on schedule. Given the harsh winter weather this year in southwest Pennsylvania, this was terrific performance on MarkWest's part. During the second quarter, we will be turning additional wells to production as planned. While still early in the development phase of the play, we are encouraged with the progress being made by our team. The infrastructure expansion is on schedule, we continue to drill high-quality wells, to optimize the cost of drilling and completing wells and our production is increasing. Most importantly, this keeps us solidly on track to exit 2009 at our Marcellus production target of 80 to 100 Mmcfe per day net. With the completion of the cryogenic plant at the end of this year, we will be well-positioned to continue to grow our Marcellus production in 2010."