In addition to the sale of some of Transcontinental Gas Pipe Line’s gas transportation assets in Texas to Crosstex earlier this week (see related story), Williams also has agreed to sell three straddle plants in Western Canada to Inter Pipeline Fund of Calgary for C$715 million (US$540 million).

Williams said the Canadian asset deal will release $30 million in U.S. letters of credit and prepayments back to Williams by the end of the year. It also expects to record an estimated pre-tax gain of US$190 million, which will be reported in discontinued operations in its third quarter financial results.

The sale includes 100% ownership in the Cochrane (2.5 Bcf/d) and Empress II (2.5 Bcf/d) processing plants, and Williams’ 50% stake in the Empress V facility (0.5 Bcf/d). All plants are located in southern Alberta and straddle TransCanada PipeLines’ Alberta and Mainline. The plants process about 5.5 Bcf/d, extracting natural gas liquids such as ethane and propane prior to the gas being exported from the province. Williams bought the plants as part of a $1.15 billion asset purchase from TransCanada in 2000 (see Daily GPI, Aug. 4, 2000).

The sale is expected to close in the third quarter, pending regulatory approvals.

“This sale represents the single largest source of funds that we targeted from divestitures this year,” said CEO Steve Malcolm. “As we’ve outlined before, these sales are expected to contribute toward our debt reduction strategy.”

The sale of the straddle plants does not include Williams’ olefins business, which extracts natural gas liquids and olefins from oil sands refining near Fort McMurray, AB.

Inter Pipeline, which operates 3,100 miles of pipelines and 1.2 million barrels of petroleum storage, said it will boost cash distributions to holders of its publicly traded units to 75 Canadian cents a year from 72 Canadian cents after the deal closes. It said that last year, the assets generated C$646 million of revenue and C$67 million of operating earnings. The acquisition “will allow us to become a major player in the NGL extraction business with competitively positioned, world-scale operations,” said CEO David Fesyk.

Inter Pipeline will fund the deal with short-term debt and an equity issue. It will sell 33 million subscription receipts at C$7.55 each in a bought deal with proceeds expected to be C$250 million.

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