Williams Partners L.P. (WPZ), a natural gas gathering and processing as well as interstate natural gas pipeline master limited partnership, announced the implementation of its precedent agreements for a planned expansion of its Transco pipeline.
 
In northeastern and southeastern United States, natural gas is distributed through a 10,000-mile pipeline system called Transco pipeline. The system has a capacity of approximately 8.6 billion cubic feet per day.
 
Under the terms of agreement, Williams Partners will provide 225 thousand dekatherms of incremental natural gas transportation capacity to serve the developing southeastern markets in 2012 and 2013. The expansion deal will be executed in two phases, with the first phase serving 95,000 dekatherms by the fall of 2012 and the second phase serving 130,000 dekatherms by the summer of 2013.
 
The Mid-South Expansion project is intended to serve the Transco natural gas pipeline to the city of LaGrange, Georgia, Progress Energy Carolinas, Inc., and Southern Company Services, Inc. The project will transport clean-burning natural gas from Transco’s Station 85 pool to existing and upcoming power generation and municipal facilities in the Southeast.
 
The company also intends to submit an application to the Federal Energy Regulatory Commission for the sanction of the Mid-South Expansion project construction. The company expects the capital cost of the project to be $214 million.
 
The partnership’s growth outlook is supported by relatively favorable natural gas liquid (NGL) pricing outlook and a solid base of fee-based cash flow. Williams Partners’ hefty growth backlog and lower cost of capital will also have a positive effect on long-term distribution growth.
 
We remain impressed with the geographically diverse set of gathering, treating, processing, and pipeline and storage assets. Overall, with increased asset scale and size, a sizable project backlog, leverage to positive NGL fundamentals, as well as healthy distribution coverage, the partnership is poised for future growth.
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