MarkWest, the midstream company that constructs and operates Range Resource’s Marcellus gas gathering activity, recently applied for and was denied a request to expand their Fulton and Stewart gas compressor facilities in Mount Pleasant Township in Washington Co., PA. The Mt. Pleasant Township Zoning board denied the addition of a 5th compressor to the Fulton station and a 3rd to the Stewart station. The zoning board side is arguing that because these structures are considered “nonconforming uses” for zoned areas intended for agricultural use they cannot be permitted unless approved by the board, which is hesitant due to complaints by residents about light, noise and odor from the compressors. The MarkWest side of the debate references the Pennsylvania Oil & Gas act which prevents regulation of gas drilling activity by local municipalities. Unfortunately for MarkWest, in two decisions last year the Pennsylvania Supreme Court sided with the municipalities deciding that the municipalities can regulate industry activity that is not specifically mentioned in the act which includes compressor stations.
The question now is will this set back affect Range’s production in the area. Range has 16 Marcellus permits in Mount Pleasant Township in the last year, as seen in the below map, and 191 for all of the Washington Co.
MarkWest’s gathering facility in the area contained 10 compressor stations in the 4Q 2009, as seen in the below map presented in their latest investor presentation.
Now, the current issue concerning the addition of 2 more compressors for the Fulton and Stewart stations may seem like a small tug of war between operator and local government but the outcome of this may set a precedent that could create major issues for MarkWest, in turn curtailing Range’s progress due to the lack of midstream resources. This issue is far from over and it will be very interesting to see how it all pans out.
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