UPDATE 2-Penn Virginia to spend $380 mln on pipeline projects
* To spend $380 million between 2012 and 2018 * Agreements with Southwestern, Shell unit, Range Resources * PVR switching from coal to midstream natgas business May 21 (Reuters) - Penn Virginia Resource Partners said on Monday it will begin building pipeline extensions in the natural gas-rich Marcellus Shale in Pennsylvania that will further link growing supplies of the fuel with key market pipelines. The company will spend about $380 million between 2012 and 2018 on natural gas infrastructure. The pipeline extensions will provide an outlet for producers to link into El Paso Corp's EP.N Tennessee Gas Pipeline, and Williams Cos WMB.N Transcontinental pipeline, a major artery that moves gas into the densely-populated U.S. Northeast, where prices tend to spike during peak demand. PVR has entered into agreements with Royal Dutch Shell RDSa.L, Southwestern Energy SWN.N, Range Resources RRC.N and privately-held Inflection Energy to transport gas. Construction to extend PVR's Lycoming West pipeline system by 19 miles through Lycoming County and into Tioga County is expected to begin within two weeks and be completed sometime by the end of the year. Another line, which hinges on Shell's commitments to ship gas, will link into the Tennessee line and is expected to be completed by the end of 2013 or early 2014. On the Lycoming East system, privately-held Inflection Energy will move gas volumes to the Transcontinental line upon its completion by year's end. PVR will also construct lateral pipelines for Shell and Range to bring gas from the wellheads to the trunkline for transport to the Transcontinental line, the company said in a statement. PVR's primary business of owning and managing coal reserves has recently shifted into the midstream natural gas business. Last week, the company closed a $1 billion acquisition of Chief Oil & Gas's gas gathering assets in the Marcellus Shale. The company's intention had been to build out its midstream natural gas business even before natural gas began gaining market share over coal for power generation, a spokesman said. "Midstream is the larger business now," said Stephen Milbourne, a spokesman in Radnor, Pa. "In general coal is a cyclical business and the diversification into midstream was a natural hedge against cyclicality of coal. It's been a deliberate attempt by the company to diversify." Shares of PVR were last trading at $23.51.