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Williams to process offgas in Canada’s oil sands; nearly 15,000 bpd of new NGL/olefins production by 2018; producer GHG reductions

Williams has signed a new long-term gas processing agreement with a Canadian oil sands producer. Williams will extract, transport, fractionate, own and market the natural gas liquids (NGLs) and olefins recovered from the offgas at the producer’s upgrader near Fort McMurray, Alberta. The NGL/olefins recovered are expected to be approximately 12,000 barrels per day (bpd) by mid-2015 and growing to approximately 15,000 bpd by 2018.

The NGL/olefins mixture will be fractionated at Williams’ Redwater facilities into an ethane/ethylene mix, propane, polymer grade propylene, normal butane, an alkylation feed and condensate. The ethane price risk associated with this deal is mitigated via the previously announced long-term agreement to supply NOVA Chemicals Corporation with up to 17,000 bpd of ethane and ethylene.

The propane recovered will be sold into the local propane market and would potentially be used as feedstock at Williams’ proposed propane dehydrogenation (PDH) facility in Canada. The other products will be sold into the established markets where Williams sells existing NGLs and olefins produced in Canada.

The offgas processing that Williams pioneered reduces emissions at its customers’ oil sands production facilities. Williams captures and processes a rich NGL/olefins mixture that would normally be burned by the oil sands producer. The producer instead burns methane that Williams provides in exchange for the NGL/olefins mixture.

Once full operating capacity is achieved at the producer’s location, processing the offgas is expected to reduce emissions of CO2 by an average of approximately 200,000 tonnes per year. It is expected to reduce emissions of sulphur dioxide (SO2) by an average of approximately 2,000 tonnes per year.

When combined with Williams’ existing offgas processing at another third-party oil sands producer, the company’s operations in Canada will eventually reduce annual CO2 emissions by more than 500,000 tonnes and annual SO2 emissions by 4,500 tonnes.

To support the new agreement, Williams plans to build a new liquids extraction plant and supporting facilities at the oil sands producer’s upgrader. It also plans to build an extension of its Boreal Pipeline that will enable transportation of the NGL/olefins mixture to its expanded Redwater facility outside of Edmonton.

The total capital expenditures expected for the project is CA$500 million to CA$600 million. Williams expects to fund the construction using cash flows from its Canadian operations as well as with international cash on-hand.

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