US Williams to acquire Caiman Eastern Midstream for $2.5bn

20 March 2012 01:53  [Source: ICIS news]

HOUSTON (ICIS)--Williams has agreed to acquire Caiman Eastern Midstream for $2.5bn (€1.9bn), giving Williams access to natural gas liquids (NGLs) in the Marcellus Shale, the US-based pipeline and olefins producer said on Monday.

Caiman Eastern Midstream owns a gathering system, two processing facilities and a fractionator. In addition, Caiman Eastern Midstream plans to expand all three operations as well as build an ethane pipeline. Williams should complete the deal in the second quarter.

Caiman Eastern Midstream is a subsidiary of Caiman Energy.

The NGLs in the Marcellus Shale are a potential source of low-cost feedstock for the North American petrochemical industry.

Canada-based NOVA Chemicals has signed agreements for long-term ethane supply with Caiman Energy. The ethane will supply the company's Corunna cracker, which it is converting to use up to 100% ethane.

In addition, Shell is evaluating a site in Pennsylvania for a possible cracker, which would use ethane produced from the Marcellus Shale.

Enterprise Products plans to build an ethane pipeline connecting the Marcellus and Utica shales to the US Gulf coast, the nation's petrochemical hub.

Caiman's assets are anchored by long-term contracted commitments, Williams said.

Williams estimates that the Caiman system will gather more than 2bn cubic feet (bcf)/day and produce 300,000 bbl/day of NGLs and condensate by 2020.

Also, Williams intends to participate in a new joint venture with Caiman Energy, which will develop mid-stream infrastructure in the Utica Shale, which lies mainly in Ohio and northwest Pennsylvania, Williams said.

"These new assets, anchored by long-term agreements with a diverse set of customers, give us a major presence in the liquids-rich portion of the Marcellus Shale," Alan Armstrong, Williams chief executive said in a statement.

"We expect significant long-term growth potential because the liquids-rich gas makes this area the most economical and top-performing play for producers in North America," he said.

"It's also just adjacent to the rich gas and oil-producing portions of the Utica Shale, where we're planning on developing new infrastructure with Caiman. Our goal is to be the leading gathering, processing and transportation solution provider for producers in the Marcellus Shale," Armstrong said.

($1 = €0.76)

By: Al Greenwood
+1 713 525 2645

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