US Williams buys Caiman to increase Marcellus netbacks, production

20 March 2012 20:56  [Source: ICIS news]

HOUSTON (ICIS)--Williams is making headway to become a leading player in the Marcellus Shale with its agreement to acquire Caiman Eastern Midstream, a company official said on Tuesday.

“We intend to be the number one or number two player in the very large Marcellus basin, and we believe this moves us in that direction,” said Williams CEO Alan Armstrong. “Super-sizing our Marcellus footprint with $2.5bn [€1.9bn] acquisition of Caiman Eastern Midstream in what we believe is richest-value area of this rich-gas play.”

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.

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.

Armstrong said at the lower prices of $2.30/MMbtu for natural gas, there is a netback of $5.70/MMBtu with the NGL cost advantage, and that excludes uplift from ethane production.

“This is going to be a very large system for us,” said Armstrong.

By 2015, Williams expects the 1.2m acres it has acquired in the Marcellus to produce 5.0 Bcf/day and 300,000 bbl/day of liquids, Armstrong said.

By: Sheena Martin
+1 713 525 2653

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