Integrated energy firm, Williams Companies (WMB) entered into a long-term ethane and ethylene supply deal with Canada’s biggest plastic producer NOVA Chemicals Corporation. In this regard, Williams aims to invest about C$311 million for the expansion of two primary plants at Fort McMurray and Redwater, which will support the company’s production of up to 17,000 barrels of ethane and ethylene every day for NOVA Chemicals.
As a part of the expansion program, Williams will remodel its sands off-gas extraction plant near Fort McMurray and build a de-ethanizer at the Redwater natural gas liquids (NGL)/olefins fractionation facility near Edmonton, Alberta. The development plants are expected to be operational from the first quarter of 2013.
Currently, Williams is also constructing a NGL pipeline (261-mile long and 12-inch wide), with a capacity of 43,000 barrels per day (bpd) of off-gas NGL/olefins between Fort McMurray extraction facility and Redwater fractionator. The capacity of the pipeline can be increased to 125,000 bpd in the future with the help additional pump stations. This pipeline, which is expected to come on-line in April 2012, will benefit Williams to spread its business across Canada.
We believe that these enhancements will be able to cater to the high demand for ethane in the petrochemical industry of Canada. We also remain bullish regarding the company’s midstream and pipeline businesses, which favorably position Williams to capitalize on the various growth opportunities.
Tulsa, Oklahoma-based Williams is focused on exploration and production, midstream gathering and processing, and interstate natural gas transportation primarily in the Rocky Mountains, Gulf Coast, Pacific Northwest, Eastern Seaboard, and the Marcellus Shale in Pennsylvania. The company divides its business into three segments: Exploration & Production, Williams Partners – that includes the company’s 84%-owned master limited partnership Williams Partners L.P. (WPZ) – and Other.
Williams currently retains a Zacks #1 Rank, which implies a short-term Strong Buy rating.
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