Williams Partners to buy Williams’ Geismar, La., olefins production

06-Nov-12

Williams Partners and Williams have announced an agreement for Williams Partners to acquire Williams’ approximately 83% undivided interest in the Geismar olefins production facility, as well as Williams’ refinery-grade propylene splitter for US$2.264 bln and pipelines in the Gulf region, for US$100 mln. Additionally, Williams Partners will be responsible for the completion of the ongoing expansion of the Geismar facility projected to cost US$270 mln and additional pipelines projected to cost approximately US$160 mln. The partnership expects the addition of olefins production to its business would bring more certainty to cash flows that today are exposed to the market for ethane, which is projected to experience periods of volatility as feedstock demand for infrastructure lags new supplies from shale-gas production. North American ethylene demand is expected to remain strong, given its continuing advantaged cost compared with ethylene derived from crude-oil based feedstock. Located south of Baton Rouge, La., the Geismar facility is a light-end natural gas liquid (NGL) cracker with current inlet volumes of 39,000 bpd of ethane and 3,000 bpd of propane and annual production of 1.35 bln lbs of ethylene. With the benefit of a significant expansion under way and scheduled for completion by late 2013, the facility’s consumption of ethane will increase to a maximum of 57,000 bpd and annual ethylene production capacity will grow by 600 million pounds to 1.95 billion pounds. Williams Partners’ overall undivided ownership interest following the expansion will be approximately 88 percent. The pipelines included in the transaction include a 212-mile ethane pipeline between Lake Charles and Geismar, a 3 mile propane pipeline, a 50 mile pipeline between Port Arthur and Lake Charles, and 60 miles of product pipelines in and around the Houston Ship Channel.