Williams Partners LP, Tulsa, has initiated an adviser-led process to explore the monetization of its indirect ownership interest in the recently rebuilt and expanded Geismar, La., olefins plant and complex (OGJ Online, Feb. 10, 2015).
The process, which may result in a sale or a long-term, fee-for-service tolling agreement, comes as part of the company’s strategy to narrow its focus and allocate capital to its strong core, natural gas-focused business, said Williams Partners, which alongside acting as operator, holds an 88.5% undivided ownership interest in the Geismar site.
If the process results in a sale, Williams Partners plans to use a portion of the proceeds to reduce debt in order to maintain investment-grade credit metrics, with the balance of proceeds to be used for reducing planned equity issuances, the company said.
Given the attractive long-term outlook for US ethylene crackers, the Geismar plant would offer an attractive investment opportunity for potential buyers seeking to quickly backward integrate into ethylene in the US Gulf Coast, particularly in light of cost-overrun risks associated with building a grassroots olefins facility in the region during the coming years, according to Alan Armstrong, chief executive officer of Williams Partners’ general partner.
Rebuilt and expanded in 2015 following a June 2013 explosion at the site (OGJ Online, June 13, 2013), the Geismar complex produces 1.95 billion lb/year of ethylene and 114 million lb/year of propylene.
The proposed monetization plan for Geismar follows Williams’ Aug. 8 announcement that it has agreed to sell its Canadian businesses to Inter Pipeline Ltd. for combined cash proceeds of $1.35 billion (Can.) in a transaction scheduled to close later this year.
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