MOSCOW (MRC) -- Williams Partners LP has initiated an adviser-led process to explore the monetization of its indirect ownership interest in the Geismar, Louisiana olefins plant and complex, reported Hydrocarbonprocessing.
The process may result in a sale or a long-term, fee-for-service tolling agreement.
Williams currently holds an approximate 88.5% undivided ownership interest in the Geismar olefins plant and is operator of the facility. In 2015, Williams placed in service an expansion of the facility that increased its ethylene production capacity by 300 Mtpy, for a total production of 975 Mtpy of ethylene and 57 Mtpy propylene . The plant is a predominantly ethane-fed, light-end natural gas liquids cracker. Williams has held an ownership stake in the Geismar plant since 1999.
"Given the attractive long-term outlook for U.S. ethylene crackers, we believe our Geismar plant presents an attractive investment opportunity for potential buyers, especially those seeking to quickly backward integrate into ethylene in the US Gulf Coast," Armstrong said. "In addition, we believe this asset provides an attractive value proposition for those considering the timing and cost-overrun risks of building a new ethylene facility in the US Gulf Coast in the coming years."
Armstrong added, "We believe the potential monetization of this asset would create significant value for Williams Partners and our decision to explore alternatives with respect to the Geismar olefins plant is consistent with Williams’ strategy to narrow its focus and allocate capital to its strong core, natural gas-focused business."
If the process results in a sale, Williams Partners would expect to use a portion of the proceeds to reduce debt in order to maintain investment-grade credit metrics and the balance of the proceeds would reduce planned equity issuances.
As MRC informed previously, in late March 2016, Williams announced the startup of its second offgas liquids extraction plant, a key asset in the company’s Canadian midstream and petchem complex. The new plant boosts domestic production of petchem feedstocks and significantly reduces emissions in the oil sands production process while recovering valuable natural gas liquids (NGLs) and olefins.
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.