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Pipeline operators MarkWest Energy Partners LP (MWE - Analyst Report) and Sunoco Logistics Partners L.P. (SXL - Analyst Report) have teamed up to build a distribution system to transport ethane produced in the Marcellus Shale Basin to markets along the Gulf Coast.
 
Known as the ‘Mariner Project’, the initiative is expected to begin service by the second quarter of 2012. It will initially ship up to 50,000 barrels of ethane per day to Gulf Coast markets that may be increased to support additional ethane production in the Marcellus region. The Mariner Project is supported by key producers including Range Resources Corporation (RRC - Analyst Report) and Chesapeake Energy Corporation (CHK - Analyst Report).
 
MarkWest, through its majority-owned joint venture MarkWest Liberty Midstream & Resources, has been working since late 2009 to construct and operate natural gas midstream services to support producers in the emerging Marcellus Shale play in western Pennsylvania and West Virginia.
 
MarkWest runs a fractionalization complex in Houston, Pennsylvania, where gas gathered from Marcellus wells is processed and sent to storage facilities or pipelines. For the Mariner Project, MarkWest Liberty will be required to make minor adjustments to its processing facility to recover sufficient ethane (the primary constituent in ethylene) to allow the residue gas to meet interstate gas pipeline specifications. MarkWest Liberty will also install additional facilities at its processing and fractionation complex to separate the ethane for delivery to downstream Mariner Project facilities.
 
Additionally, MarkWest Liberty will build a 45-mile pipeline from its Houston complex to an interconnection with an existing Sunoco Logistics pipeline at Delmont, Pennsylvania. The ethane will be piped to an existing East Coast facility where Sunoco Logistics will construct refrigerated ethane storage facilities. Subsequently, the ethane will be transported through a marine vessel to premium markets in the Gulf Coast. Some of the natural gas liquid may be transported to markets in the northeast, providing multiple ethane blending options in the process.
 
We believe that the Mariner Project will provide an efficient solution for producers to move ethane across Pennsylvania to a Delaware River marine port to access multiple markets, while taking advantage of MarkWest Liberty’s extensive experience in the highly prospective Marcellus Shale play. MarkWest Liberty is the largest provider of midstream services in the region and is investing a significant amount of capital to provide infrastructure that will be required for the development of the Marcellus Shale leaseholds.

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