Williams Partners LP on Thursday said it now owns a half-stake in the Overland Pass Pipeline Co. LLC and plans to assume the role of operator after completing the bigger buy-in with joint venture (JV) partner ONEOK Partners LP.

ONEOK Partners received about $424 million in the transaction, which was announced two months ago (see Daily GPI, July 26).

The Overland Pass Pipeline JV was established by the partners in May 2006, with Williams Partners then owning 1% interest. The project's natural gas liquids (NGL) pipeline went into service in November 2008. The pipe is able to transport about 140,000 b/d and has the ability to expand capacity to 255,000 b/d with additional pump facilities.

Included in the pipeline system is a 760-mile NGL pipeline from Opal, WY, to the Midcontinent NGL market center in Conway, KS, as well as a 150-mile extension into the Piceance Basin and a 125-mile extension into the Denver-Julesberg Basin.

Williams Partners' equity NGL volumes from its two Wyoming plants and its Willow Creek facility in Colorado are dedicated for transport on Overland Pass Pipeline under a long-term shipping agreement.

With its increased stake, Williams Partners said it would exercise its option to begin operating the pipeline, taking over from ONEOK Partners. As long as Williams Partners owns at least 50% of the NGL pipe, it has the option to become the operator with 30 days notice.

"The partnership plans to work closely with ONEOK Partners to enable a smooth transition of the operations," said Tulsa-based Williams Partners. "The two partnerships will work together to facilitate expansion opportunities due to increased demand for service on Overland Pass Pipeline."

Williams Partners funded the transaction with cash on hand and debt. ONEOK Partners plans to use the proceeds to repay short-term debt and to fund capital projects. This transaction is not expected to affect ONEOK Partners' 2010 net income guidance of $450-490 million, it said. Earnings from the pipeline system would be accounted for "prospectively as equity earnings from investments, beginning in September."

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