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Williams Partners Weighing Geismar Plant Sale

Williams Partners LP is considering selling its interest in the Geismar, LA, olefins plant and complex. The process might result in a sale or a long-term, fee-for-service tolling agreement, the company said.

In the event of a sale, a portion of proceeds would be used to reduce debt and preserve investment-grade credit. Last month, the partnership and Williams said they would sell their Canadian businesses to Inter Pipeline Ltd. for combined cash proceeds of C$1.35 billion, with closing expected this year.

Williams Partners is the operator and holds an 88.5% undivided ownership interest in the Geismar plant. In 2015, the partnership placed in service an expansion that increased ethylene production capacity by 600 million pounds per year, for a total annual production of 1.95 billion pounds of ethylene and 114 million pounds of propylene (see Daily GPI, June 19, 2015). 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.

"This premiere olefins production facility on the Gulf Coast benefits from a recent expansion, access to significant U.S. shale gas reserves, proximity to a variety of transport logistics options and an experienced team of employees who have run the facility safely and reliably since the expanded plant came into operation," said Williams CEO Alan Armstrong.

"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."

In 2013 an explosion at the Geismar plant killed one person and injured dozens of others. Restart of the plant was delayed multiple times (see Daily GPIDec. 31, 2014).

"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 U.S. 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 U.S. Gulf Coast in the coming years."

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