Tulsa, Oklahoma-based Williams Companies, Inc. (WMB) has entered into a gas processing agreement with a Canadian oil sands producer.
Per the deal, Williams will engage in assembling off-gas generated from bitumen feedstock and follow it up with the extraction of valuable natural gas liquids (NGLs) such as propane and ethane. The pure natural gas liquids will then be sent back to the oil sands company for energy generation.
The whole process will be carried out at a site near Fort McMurray, Alberta.
Williams expects to recover around 12,000 barrels per day of natural gas liquids by 2015 and 15,000 barrels per day by 2018. The natural gas liquids and olefins mixture will also be processed by the company into other products, such as propane, for sale.
The mixture will be fractioned at Williams' Redwater facility into an ethane/ethylene mix, propane, polymer grade propylene, normal butane, an alkylation feed and condensate.
For a new liquids extraction plant, the company plans to spend around C$500 million to C$600 million. It will also build an extension of its Boreal pipeline to transport NGL and olefins to its Redwater facility.
Williams expects to reduce carbon dioxide (CO2) emissions by 200,000 tons a year, and sulphur dioxide (SO2) emissions by 2,000 tons per year after reaching full operation capacity.
Combined with its Suncor Energy Inc. (SU) operation, yearly CO2 emissions will be reduced by more than 500,000 tons and SO2 emissions will be reduced by more than 4,500 tons.
Williams Companies, Inc. is a premier energy infrastructure provider in North America. The company's core operations include finding, producing, gathering, processing, and transportation of natural gas. Boasting a widespread pipeline system, Williams is one of the largest domestic transporters of natural gas by volume.
Williams reports its results in three segments: Williams Partners that includes the company's 72% owned master limited partnership Williams Partners L.P. (WPZ); Midstream Canada & Olefins; and Other.
Williams currently holds a Zacks #3 Rank (short-term Hold rating). We also maintain a long-term Neutral recommendation on the stock.