Williams Partners LP agreed to acquire Caiman Energy’s wholly owned subsidiary Caiman Eastern Midstream LLC for $2.5 billion in a move that will provide Williams Partners with assets in the natural gas liquids-rich portion of the Marcellus shale.
In addition, Williams Partners announced a new joint venture with Caiman Energy to develop midstream infrastructure in the Utica shale, primarily in Ohio and northwestern Pennsylvania.
Caiman Eastern Midstream is an independent gathering and processing business operating in northern West Virginia, southwestern Pennsylvania, and eastern Ohio. Assets include a gathering system, two processing plants, and a fractionator. Expansions to the gathering system, processing plants, and fractionator are under construction. An ethane pipeline is planned.
By 2020, Williams Partners expects the Caiman system will gather more than 2 bcfd and produce 300,000 b/d of NGLs and condensate. The partnership expects to complete the acquisition in the second quarter.
Terms call for Williams Partners to finance the acquisition with $1.78 billion in cash and $720 million in Williams Partners common units to be issued to Caiman. Consequently, Williams Cos. Inc. intends to invest another $1 billion into Williams Partners.
This acquisition builds on Williams Partners’ strategy to build transportation assets in the Marcellus shale.
Williams Partners is building the Susquehanna Supply Hub in northeastern Pennsylvania, a gas supply hub capable of delivering more than 3 bcfd into four gas pipeline systems.
Williams Partners’ gathering system in northeastern Pennsylvania currently three counties and has a capacity of 750 MMcfd.
The Springville pipeline connects to Williams Partners’ Transco system, Tennessee Gas Pipeline, and Millennium Pipeline. The recently announced 120-mile Constitution Pipeline will connect Williams Partners’ Susquehanna Supply Hub to the Iroquois Gas Transmission and Tennessee Gas Pipeline systems in Schoharie County, NY.
Williams Partners’ Transco interstate gas pipeline system runs through eastern Pennsylvania and has several expansion projects, including the proposed Atlantic Access project, which would expand direct access for Marcellus and Utica plays by late 2014.
Williams Partners also owns a 51% interest and operates the Laurel Mountain Midstream joint venture in western Pennsylvania. Laurel Mountain includes a gathering system of nearly 1,400 miles of pipeline with a capacity of 230 MMcfd.