Aqua America Inc. (NYSE: WTR) ("Aqua") and Penn Virginia Resource Partners, L.P. (NYSE: PVR) ("PVR") on Sept. 20 announced that certain of their operating subsidiaries have formed a joint venture, Aqua - PVR Water Services, LLC, to construct and operate a private pipeline system to supply fresh water to natural gas producers drilling in the Marcellus Shale in north-central Pennsylvania. The 12-inch diameter steel pipeline will largely parallel the trunkline of PVR's gathering system in Lycoming County and will share PVR's existing rights-of-way.
PVR is constructing the fresh water pipeline and handling negotiation of water pipeline capacity contracts with producers. Aqua will operate the system when completed and handle water intake supply arrangements. Aqua and PVR each anticipate investing approximately $12 million for construction of the first segment of the project. The joint venture has entered into an agreement with Range Resources - Appalachia, LLC a wholly owned subsidiary of Range Resources Corporation (NYSE: RRC) to supply fresh water to three of Range's water impoundments, and negotiations with other area producers for supply agreements are on-going.
The joint venture has commenced construction of the fresh water pipeline, and limited water delivery is expected before year-end. The entire 18-mile long first segment of the system is currently anticipated to be fully completed and begin regular operation during the first quarter of 2012.
William H. Shea, Jr., Chief Executive Officer of PVR, said, "We are very excited to join with Aqua America in building a private water pipeline to supply Marcellus producers. We are also pleased to welcome Range Resources as an anchor customer on the pipeline. We believe this project is a 'win-win' solution that offers tangible benefits to both the contracting producers and the local communities in which we operate. The pipeline will provide contracting producers with a more reliable fresh water source at a lower delivered cost. By reducing the number of trucks operating on area highways, area residents will benefit from reduced traffic congestion, noise and delays."
Nicholas DeBenedictis, Chairman and CEO of Aqua, said, "Marcellus Shale offers a critical and challenging opportunity for the State of Pennsylvania. Critical because the energy needs of the country must be developed domestically and Pennsylvania can be that provider. Challenging because it must be done in a manner that protects and manages our most precious resource, water. This project is the first that prudently enables the development of the Marcellus while helping to protect our water sheds and manage our supplies. Pumping water through pipe, as opposed to trucking water, reduces road traffic and damage that can result in runoff that can negatively impact streams in this sensitive part of the state. Managing the supply from confirmed reliable sources reduces the potential for over withdrawal from those same streams."
Aqua America (NYSE: WTR) is one of the largest U.S.-based, publicly-traded water utilities and serves almost 3 million residents in Pennsylvania, Ohio, Illinois, Texas, New Jersey, Indiana, Virginia, Florida, North Carolina, Maine, New York and Georgia. Aqua America is listed on the New York Stock Exchange under the ticker symbol WTR.
Penn Virginia Resource Partners, L.P. (NYSE: PVR) is a publicly traded limited partnership which owns and manages coal and natural resource properties and related assets, and owns and operates midstream natural gas gathering and processing businesses. We own approximately 900 million tons of proven coal reserves in Northern and Central Appalachia, and the Illinois and San Juan Basins; our midstream natural gas assets are located principally in Texas, Oklahoma and Pennsylvania and include more than 4,200 miles of natural gas gathering pipelines and 7 processing systems with approximately 420 million cubic feet per day of capacity. For more information about PVR, visit www.pvrpartners.com.
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