09-Aug-16 Calgary-based Inter Pipeline Ltd. is buying the Canadian assets of the Williams pipeline companies at a steep discount, and will take on its massive petrochemical project in Alberta for US$1.35 bln. Under the deal announced, Inter Pipeline will acquire two natural gas liquids plants in Fort McMurray, a gas processing plant near Redwater and a 420 km pipeline network linking the facilities. The company will also assume responsibility for a proposed US$1.85 bln propane facility that would produce propylene. The US$1.35 bln price tag represents a 45% discount from the initial cost.
Oklahoma-based Williams Cos. began seeking a buyer for its Canadian assets after a proposed takeover of the company by Dallas-based Energy Transfer Equity LP collapsed in June. Williams and its master-limited partnership, Williams Partners LP, will use proceeds of the sale, expected to close in the third quarter, to pay down debt. The two plants in Fort McMurray extract natural gas liquids and synthetic petrochemicals called olefins from off-gas, a byproduct of bitumen upgrading. The fractionator near Redwater, northeast of Edmonton, separates the natural gas liquids and olefins into propane, propylene and butane, among other products.
If the deal goes ahead, Inter Pipeline would secure Williams’ long-term agreements with Suncor Energy and Canadian Natural Resources Ltd. to supply the extraction plants with off-gas from their upgraders. Williams had pioneered the process of extracting natural gas liquids and olefins from off-gas. It has spent US$250 mln preparing for the proposed propane dehydrogenation facility, which would produce 525,000 tpa of propylene. Inter Pipeline expects to make a final decision on the petrochemicals project by the end of the year and, if it gives the green light, plans to have the facility operating by 2020.
