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Williams to Expand Wamsutter Processing; Completes Piceance Purchase

Looking to meet the expanding production growth out of the Wamsutter area, Williams announced plans last week to significantly increase the processing and natural gas liquid (NGL) production capacities at the Echo Springs processing plant in Carbon County, WY.

Specifically, the expansion will add approximately 350 MMcfe/d of processing capacity and 30,000 b/d of NGL production capacity, roughly doubling the plant's volumes in both cases. Williams expects to bring the additional capacity on-line during late 2010, subject to all applicable permitting. Once the expansion is complete, the plant's processing capacity will be 740 MMcfe/d and its NGL production capacity will be 60,000 b/d.

"The three existing processing trains at Echo Springs are already running at their combined capacity and the producers in the Wamsutter area are expecting significant volume growth in the future," said Alan Armstrong, president of Williams' midstream business. "This expansion will provide a significant boost to our large-scale processing capacity in Wyoming, enabling us to continue delivering reliable services to the producers in the area."

Williams' plant in Opal, WY, currently has a processing capacity of 1.45 Bcfe/d and produces 67,000 barrels of NGLs per day. Once the Echo Springs expansion is complete, the two plants in Wyoming will be capable of processing 2.19 Bcfe/d and producing 127,000 b/d of NGLs.

Williams said it plans to spend up to $233 million for the Echo Springs expansion to construct a fourth cryogenic processing train and associated facilities. Construction is expected to begin during the second half of 2009. Williams' board of directors recently approved the project, which was not included in prior 2009 capital expenditure guidance.

The Echo Springs plant is part of the Wamsutter system, which also includes an approximate 1,700-mile gathering system. The Wamsutter system gathers approximately 69% of the natural gas produced in the Washakie Basin and connects with Colorado Interstate Gas, Wyoming Interstate Co. and Southern Star Central Gas Pipeline systems that transport natural gas to end markets from the basin.

In 2007 Williams sold 100% of the Class A membership interests and 50% of the initial Class C units in Wamsutter LLC, the limited liability company that owns the Wamsutter system, to Williams Partners LP for $750 million (see NGI, Dec. 3, 2007). Under the terms of the agreement, Williams retained the right to make material expansion investments in Wamsutter in exchange for additional Class C units, which would entitle it to receive an increased portion of the growth cash flows. Williams will receive additional Class C units in Wamsutter LLC for the Echo Springs expansion project once it is placed into service.

Also last week, Williams announced that it has completed the purchase of certain interests in Colorado's Piceance Basin for approximately $285 million in cash from Oklahoma City, OK-based independent producer SandRidge Energy and other parties, the company said Thursday. The assets represent more than 1.9 Tcfe of probable and possible reserves on approximately 32,500 gross acres and 24,000 net acres, according to Williams. The transaction will boost Williams' probable and possible reserves in the basin by more than 42% to 6.4 Tcfe, based on Williams year-end 2007 estimates. Williams noted that it also had 2.8 Tcfe of proved reserves at year-end 2007 in the Piceance Basin. The deal was announced earlier this month (see NGI, May 12).

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