Williams announced that its Board of Directors has approved an expansion of its Geismar olefins production facility.
The expansion will increase the facility's ethylene production capacity by 600 million pounds per year to a new annual capacity of 1.95 billion pounds. It is expected to be placed into service in the third quarter of 2013.
"The shale gas revolution in the United States, coupled with continued strong crude oil prices, has given U.S.-based ethylene manufacturing a tremendous cost advantage over many other supply regions," said Rory Miller, president of Williams' midstream business. "The results are a revitalized North American petrochemical business and a U.S. ethylene market short of supply.
"This expansion will serve petrochemical companies by adding 600 million pounds per year of new ethylene supply to the market," Miller said. "It will also add to Williams' growing large-scale infrastructure serving the petrochemical industry in the Gulf Coast region and help balance our lengthening ethane position."
The expected capital spending on the Geismar expansion is a range of $350 million to $400 million in 2012-13. These amounts will be included in the company's 2012-13 capital expenditure guidance to be released in conjunction with third-quarter 2011 financial results.
Located south of Baton Rouge, La., the Geismar facility is a light-end natural gas liquid (NGL) cracker with current volumes of 37,000 barrels per day (bpd) of ethane and 3,000 bpd of propane and annual production of 1.35 billion pounds of ethylene. The facility also produces propylene, butadiene and debutanized aromatic concentrate (DAC). Williams owns 83.3 percent of the Geismar facility and operates the plant.
Williams is an integrated natural gas company focused on exploration and production, midstream gathering and processing, and interstate natural gas transportation primarily in the Rocky Mountains, Gulf Coast, Pacific Northwest, Eastern Seaboard and the Marcellus Shale in Pennsylvania. Most of the company's interstate gas pipeline and midstream assets are held through its 75-percent ownership interest (including the general-partner interest) in Williams Partners L.P., a leading diversified master limited partnership.
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