MOSCOW (MRC) -- Calgary-based Inter Pipeline Ltd. said Monday that it’s buying the Canadian assets of the Williams pipeline companies at a steep discount - and will take on its massive petrochemical project in Alberta - for USD1.35 billion, said CalgaryHerald.
Under the deal announced Monday, Inter Pipeline will acquire two natural gas liquids plants in Fort McMurray, a gas processing plant near Redwater and a 420-kilometre pipeline network linking the facilities.
The company will also assume responsibility for a proposed USD1.85-billion propane facility that would produce propylene, a compound used in the production of plastics.
Inter Pipeline president and CEO Christian Bayle said the company is buying "unique and attractive" assets in a down market and "well below" the initial cost.
"This positions Inter Pipeline to significantly benefit as energy prices strengthen," Bayle said in a release.
The USD1.35-billion price tag represents a 45 per cent discount from the initial cost, the company said.
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.
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 USD250 million preparing for the proposed propane dehydrogenation facility, which would produce 525,000 tonnes of propylene per year. Planned startup of the PDH facility and the polypropylene (PP) plant is at the end of 2019.
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.
Williams had applied for incentives under the Alberta government’s USD500-million petrochemical program, designed to expand the industry. The program will offer royalty credits, which petrochemical companies can pass on to natural gas suppliers.
Williams, headquartered in Tulsa, Okla., is one of the leading energy infrastructure companies in North America. It owns controlling interests in both Williams Partners L.P. and Access Midstream Partners, L.P. through its ownership of 100% of the general partner of each partnership. Additionally, Williams owns approximately 66% and 50% of the limited partner units of Williams Partners L.P. and Access Midstream Partners, L.P., respectively. On June 15, 2014 Williams proposed the merger of Williams Partners and Access Midstream Partners. The proposed merger has been approved by boards of each partnership and was closed in early 2015.