Williams announced plans to add processing capacity to its Opal, WY, plant to accommodate gas production volumes from Shell Exploration and Production’s Pinedale Anticline play in southwestern Wyoming. Williams said the expansion will bring the capacity of the plant to about 1.1 Bcf/d from the current 750 MMcf/d.

Shell and its affiliates currently produce about 70 MMcf/d of gas. But to accommodate future large production increases, Shell has signed an agreement that will require Williams to add another cryogenic processing train to its Opal gas plant. The new cryogenic turbo expander plant will have a processing capacity of 350 MMcf/d and be capable of extracting more than 7,000 b/d of natural gas liquids.

Alan Armstrong, senior vice president of Williams’ midstream gas and liquids group, noted that the Rocky Mountains are a key growth basin for producers. Shell has significantly expanded its presence in the Pinedale Anticline since first entering the play in 2001 with the acquisition of McMurry Energy Co. and Nerd Energy.

“They have committed basically any incremental production to go through Opal, so you kind of get a flavor just how much we’re looking at by the size of the unit we’re adding,” said Williams spokesman Kelly Swan. “They will be ramping up over the next couple years.”

Williams has teamed with Willbros Mt. West, a business unit of the Willbros Group Inc., to provide engineering, procurement, construction and commissioning for the new gas processing unit at Opal. Engineering and procurement for the facility are underway. The new unit, which is expected to be commissioned in the fourth quarter, will be funded and owned by Willbros and operated by Williams under long-term operating and processing agreements between the parties.

Willbros has previous experience at Opal, having constructed both the second processing train and designing and building the fractionation unit and the Big Piney booster compression and slug catcher.

Armstrong said, “Willbros is a great partner for this project. They stepped up to sign a unique agreement where we can expand our franchise position in Wyoming at a time when Williams is experiencing capital constraints. This allows us to add a new revenue source with limited capital investment.”

The Opal project marks the third major capacity expansion for Williams in Wyoming over the past three years. A third cryogenic processing train was added at Opal in 2000. Williams also added a new processing unit at its Echo Springs processing plant near Wamsutter, WY, in 2002. The Echo Springs plant can process up to 390 MMcf/d.

From the Opal plant, gas can be delivered to markets throughout the West Coast and in the Rockies via connections to three interstate pipelines — Colorado Interstate Gas, Kern River Gas Transmission and Williams’ Northwest Pipeline.

In other Williams news, the company announced the completion of its $455 Million Memphis refinery sale to Premcor. The sale also contains an earn-out provision that allows Williams to potentially receive up to an additional $75 million over the next seven years. The earn-out would be paid annually depending on refining margins. CEO Steve Malcolm said the deal strengthens Williams’ available liquidity and reduces monthly cash requirements. “Transactions like this increase our immediate financial flexibility and pave the way for us to commercially focus on our natural gas pipelines, production and processing plants.”

©Copyright 2003 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.