The Geismar olefins plant located in Baton Rouge, Louisiana, is a light end natural gas liquid cracker producing 1.35 billion pounds of ethylene annually and has an inlet volume capacity of 39,000 barrels per day (bpd) of ethane and 3,000 bpd of propane.
As per the contract, Williams Partners will also acquire Williams’ pipelines in the Gulf region for $100m, and will be responsible for the completion of the olefins plant expansion costing $270m and $160m for additional pipelines.
Williams Partners general partner chief executive officer Alan Armstrong said, "The addition of the Geismar facility to Williams
Partners’ portfolio immediately reduces the partnership’s exposure to the over-supplied ethane markets by nearly 70 percent and eliminates it by 2014, while increasing our ability to produce globally marketed ethylene."
Meanwhile, Williams will give up $16m per quarter of general partner incentive distribution rights (IDRs) until 30 days after the
expanded Geismar plant is operational or until 31 December 2013.
The foregone IDRs for five quarters is expected to cost $80m to Williams.
Williams Partner is expecting the acquisition will increase cash flow in to the company by delivering to the increasing demand of ethylene in North America.
US-based Williams owns 66% in Williams Partner including the general partner interest.
