Williams Partners to explore monetizing Geismar olefins plant
Williams Partners LP (Williams) has initiated an adviser-led process to explore the monetization of its indirect ownership interest in the Geismar, Louisiana olefins plant and complex. The process may result in a sale or a long-term, fee-for-service tolling agreement.
Williams currently holds an approximate 88.5% undivided ownership interest in the Geismar olefins plant and is operator of the facility. In 2015, Williams placed in service an expansion of the facility that increased its ethylene production capacity by 300 Mtpy, for a total production of 975 Mtpy of ethylene and 57 Mtpy propylene . The plant is a predominantly ethane-fed, light-end natural gas liquids cracker. Williams has held an ownership stake in the Geismar plant since 1999.
“Given the attractive long-term outlook for U.S. ethylene crackers, we believe our Geismar plant presents an attractive investment opportunity for potential buyers, especially those seeking to quickly backward integrate into ethylene in the US Gulf Coast,” Armstrong said. “In addition, we believe this asset provides an attractive value proposition for those considering the timing and cost-overrun risks of building a new ethylene facility in the US Gulf Coast in the coming years.”
Armstrong added, “We believe the potential monetization of this asset would create significant value for Williams Partners and our decision to explore alternatives with respect to the Geismar olefins plant is consistent with Williams’ strategy to narrow its focus and allocate capital to its strong core, natural gas-focused business.”
If the process results in a sale, Williams Partners would expect to use a portion of the proceeds to reduce debt in order to maintain investment-grade credit metrics and the balance of the proceeds would reduce planned equity issuances.
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