Williams suddenly a major player in Canadian energy
August 3, 2000 02:06 PM
By Jeffrey Jones
CALGARY, Aug 3 (Reuters) - With two big deals on Thursday, U.S. energy and communications company Williams Cos. Inc. WMB has amassed a dominant position in Canada's natural gas liquids industry almost from a standing start.
Williams, a top player in gas pipelines, energy marketing and fiber-optic communications, said on Thursday it would buy most of TransCanada PipeLines Ltd.'s CA:TRP TRP western Canadian gas liquids extraction and gathering operations as well as Dow Chemical Co.'s DOW stake in a major pipeline to markets.
Financial terms were not disclosed, although Williams, which has a stock-market value of more than $19 billion, pegged the value in the "hundreds of millions of dollars."
"Previously, we just kind of dipped our toes into the Canadian energy market. But with the purchases today we're certainly diving right in there," spokesman Kelly Swan said.
Through the acquisitions, Tulsa, Oklahoma-based Williams will become the second-largest player in Canada's gas liquids production, processing and transportation segment after longtime top gun BP Amoco Plc , Swan said.
Also, the deals will boost its coverage to nearly all of the continent with operations in Canada, the Gulf Coast, Texas, the Midwest and other regions, making Williams the No. 2 liquids firm in North America after Duke Energy Corp. DUK .
Gas liquids, or NGLs, represents a major, though often overlooked, segment of the energy business. Raw liquids are produced with natural gas in many fields, and are extracted and processed into fuels such as propane and butane as well as petrochemical feedstock like ethane. The gathering and processing part of the business is referred to as "midstream."
Another recent U.S. entrant is Conoco Inc. COC.A , which bought Petro-Canada's CA:PCA gas liquids business in March.
Williams said it would buy a host of gas liquids extraction and processing plants in Alberta and British Columbia from TransCanada, which is on a drive to sell C$3-billion ($2 billion) of assets to concentrate on main businesses.
The facilities include 6 billion cubic feet of gas a day of processing capacity, 225,000 barrels a day of gas liquids processing capacity, 2,000 miles of pipeline and more than 5 million barrels of storage capacity.
It is also buying Dow's 32.5-percent stake in the Cochin pipeline, which carries liquids to markets in the U.S. Midwest and the petrochemical hub of Sarnia, Ontario, from Empress on the Alberta-Saskatchewan border. BP Amoco is the largest owner of the key liquids artery.
Previously, Williams' main asset in Canada was its stake in the soon-to-be-completed Alliance pipeline to Chicago from northeastern B.C. The C$4.5-billion line will ship gas liquids along with the gas to be extracted at a plant in Chicago.
"They've now got control, if you may, of Alberta's NGL business and the Chicago NGL business, which is starting in a couple months. They'll be able to arbitrage to the maximum extent possible with their Texas NGL business," said Sam Kanes, analyst with Scotia Capital Markets in Toronto.
Swan said gas producers in western Canada would benefit from Williams' sudden entry into the business because they will gain access to numerous new markets for their liquids.
"We have an NGL network that ties into Cochin in two places, one in Minnesota and one in Iowa. So when you combine those assets with our other NGL assets, we now will have a network that essentially stretches from the Mont Belvieu area of Texas all the way up to western Canada," he said. |
