Thursday, August 18, 2016
Inter Pipeline Ltd. (Calgary) said Aug. 8 it had entered into an agreement to acquire the shares of the Williams Co. Inc.’s and Williams Partners LP’s (Tulsa) Canadian natural gas liquids midstream businesses for a cash payout of $1.35 billion. The transaction is expected to close in the third quarter and is subject to approval under the Competition Act and other customary closing conditions.
Williams Canada pioneered the process of extracting NGLs and olefins from offgas, a byproduct of bitumen upgrading operations. Williams Canada’s assets include two liquids extraction plants located near Fort McMurray, Alta.; a fractionator near Redwater, Alta.; and a pipeline system that connects the facilities. The two extraction plants have the capacity to recover about 40,000 bbld of NGLs and olefins from the upgrader offgas. The liquids mix is then separated into marketable products at the Redwater fractionator and sold across North America.
As a result of the acquisition, Inter Pipeline also assumes responsibility for the proposed construction of a $1.85-billion propane dehydrogenation (PDH) facility near the Redwater fractionator. The facility would convert low-cost, locally sourced propane into high-value, polymer-grade propylene, an important petrochemical product largely used in plastics manufacturing.
“This accretive acquisition is a highly complementary addition to our existing NGL extraction business,” said Christian Bayle, Inter Pipeline’s president and CEO. “Consistent with our disciplined acquisition strategy, we are purchasing this unique and attractive business at a low period in the commodity cycle, and well below the original cost. This positions Inter Pipeline to significantly benefit as energy prices strengthen.”
Williams Canada pioneered the process of extracting NGLs and olefins from offgas, a byproduct of bitumen upgrading operations. Williams Canada’s assets include two liquids extraction plants located near Fort McMurray, Alta.; a fractionator near Redwater, Alta.; and a pipeline system that connects the facilities. The two extraction plants have the capacity to recover about 40,000 bbld of NGLs and olefins from the upgrader offgas. The liquids mix is then separated into marketable products at the Redwater fractionator and sold across North America.
As a result of the acquisition, Inter Pipeline also assumes responsibility for the proposed construction of a $1.85-billion propane dehydrogenation (PDH) facility near the Redwater fractionator. The facility would convert low-cost, locally sourced propane into high-value, polymer-grade propylene, an important petrochemical product largely used in plastics manufacturing.
“This accretive acquisition is a highly complementary addition to our existing NGL extraction business,” said Christian Bayle, Inter Pipeline’s president and CEO. “Consistent with our disciplined acquisition strategy, we are purchasing this unique and attractive business at a low period in the commodity cycle, and well below the original cost. This positions Inter Pipeline to significantly benefit as energy prices strengthen.”
