Mar. 28, 2011 (PR Newswire) --
TULSA, Okla., March 28, 2011 /PRNewswire/ -- Williams (NYSE: WMB) announced today that it has signed a long-term agreement to produce up to 17,000 barrels per day (bpd) of ethane and ethylene for NOVA Chemicals Corporation in Alberta, Canada.
Williams plans to invest CA$311 million to expand its two primary facilities in Alberta to support the new agreement. The expansions, which are expected to begin operating in first-quarter 2013, will allow the company to produce ethane and ethylene from its operations that process off-gas from the Alberta oil sands.
Fort McMurray, Redwater Facilities to be Expanded
The expansions involve modifying and upgrading two facilities. Williams will modify its oil sands off-gas extraction plant near Fort McMurray, Alberta, and construct a de-ethanizer at its Redwater natural gas liquids (NGL)/olefins fractionation facility near Edmonton, Alberta.
The upgrades at Fort McMurray will allow Williams to include ethane and ethylene in the NGL/olefins mixture that the company extracts from the off-gas and delivers to Redwater for fractionation.
The new de-ethanizer at Redwater will then enable Williams to initially produce approximately 10,000 bpd of an ethane/ethylene mix. This will add to its current production of approximately 14,000 bpd of a heavier NGL/olefins mixture that includes propane, propylene, butane, butylenes and condensate. Future expansions are expected to further increase ethane/ethylene production.
Under the terms of the new agreement, Williams is delivering the ethane/ethylene mix produced at Redwater into the Joffre Feedstock Pipeline (JFP). NOVA Chemicals is delivering the product via JFP into its Joffre facilities.
"These expansions will add incremental ethane supplies in Alberta, which are high-demand products for the petrochemical industry in Canada," said Rory Miller, president of Williams' midstream business. "It's a significant growth opportunity for our Canadian midstream business, as we're uniquely positioned as the only company with off-gas experience and facilities in the region.
"The new operations will also further reduce greenhouse gas and sulphur dioxide emissions from the oil sands operations," Miller said.
The Government of Alberta recently modified the Incremental Ethane Extraction Program to provide incentives for the extraction of ethane from the oil sands in order to bring new supplies of secure, long-term ethane feedstock to Alberta's petrochemical industry.
"I'm pleased to see that Williams is the first of what I believe will be many companies to benefit from the recent changes to our ethane policy," said Alberta Energy Minister Ron Liepert. "The value-added industry in the province is important, allowing Albertans to get the most out of the provinces resources – whether in investment capital, exported products or jobs."
The expenditures associated with these expansions were included in previous capital expenditure guidance, which was issued on Feb. 17.
Williams' Operations in Canada: Innovative Business, Emissions Reducer
When producers convert the Canadian oil sands into usable oil, the process produces an off-gas byproduct that includes a rich mixture of natural gas, NGLs and olefins. Williams pioneered the process of extracting the mixture from the off-gas at its Fort McMurray facility, which is located on-site at a third-party oil-sands production facility.
After it extracts the off-gas mixture, Williams returns the natural gas to the third-party oil-sands producer for its operations. It then transports the remaining NGL/olefins mixture to its Redwater facility outside of Edmonton.
At Redwater, Williams separates the NGL/olefins mixture into marketable products and removes the sulphurs. Currently, the facility produces the highest quality of propylene produced in Canada, as well as propane, butane, butylenes and condensate. When the expansions are placed into service, the facility will also produce ethane and ethylene.
Williams' off-gas processing reduces emissions of carbon dioxide (CO2) — a greenhouse gas — in Alberta by approximately 200,000 tons each year and cuts emissions of sulphur dioxide (SO2) — a contributor to acid rain — by more than 4,200 tons each year. The new expansions will further reduce both carbon dioxide and sulphur dioxide emissions in Alberta.
NGL Pipeline to Support Expansions
Williams is currently constructing a 261-mile (420 km), 12-inch NGL pipeline from its Fort McMurray extraction facility to its Redwater fractionator. The pipeline is designed to support the company's growing business in Canada.
The pipeline will have a capacity of 43,000 bpd of off-gas NGL/olefins and is expected to be placed into service in April 2012. The installation of additional pump stations in the future would enable Williams to increase capacity on the pipeline to 125,000 bpd.
About Williams (NYSE: WMB)
Williams is an integrated natural gas company 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. Most of the company's interstate gas pipeline and midstream assets are held through its 75-percent ownership interest (including the general-partner interest) in Williams Partners L.P. (NYSE: WPZ), a leading diversified master limited partnership. More information is available at www.williams.com. Go to http://www.b2i.us/irpass.asp?BzID=630&to=ea&s=0 to join our e-mail list.
Portions of this document may constitute "forward-looking statements" as defined by federal law. Although the company believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Any such statements are made in reliance on the "safe harbor" protections provided under the Private Securities Reform Act of 1995. Additional information about issues that could lead to material changes in performance is contained in the company's annual reports filed with the Securities and Exchange Commission.