- Written by Elsie Ross
Williams Energy (Canada) Inc. has signed a new long-term gas processing agreement with a Canadian oilsands producer to acquire bitumen upgrader off-gas, requiring an investment of $500 million to $600 million.
Under the new long-term agreement, Williams will extract, transport, fractionate, own and market the natural gas liquids (NGLs) and olefins recovered from the off-gas at the oilsands producer’s upgrader near Fort McMurray, Alta.
Williams expects to recover approximately 12,000 barrels per day of NGL/olefins by mid-2015, increasing to approximately 15,000 barrels per day by 2018.
To support the new agreement, Williams plans to build a new liquids extraction plant and supporting facilities at the oilsands 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 Edmonton.
The company expects to fund the project using cash flows from its Canadian operations as well as international cash on-hand.
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 barrels per day of ethane and ethylene.
The propane recovered will be sold into the local propane market and potentially would be used as feedstock at Williams’ proposed propane dehydrogenation facility in Canada. The other products will be sold into the established markets where Williams sells existing NGLs and olefins produced in Canada.
“This new agreement will build on the unique expertise and large-scale infrastructure we’ve built in Canada,” David Chappell, president of Williams, said in a news release. “The scale that we are building here—with fractionation, distribution and storage—gives us the ability to generate significant long-term incremental value from our operations."
The new operations will also further reduce greenhouse gas and sulphur dioxide emissions from the upgrader’s operations and produce valuable commodities that previously were being burned, he said.
The off-gas processing that Williams pioneered significantly reduces emissions at its customers’ oilsands production facilities. Williams captures and processes a rich NGL/olefins mixture that would normally be burned by an oilsands 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 off-gas is expected to reduce emissions of CO2 by an average of approximately 200,000 tonnes per year and emissions of sulphur dioxide (SO2) by an average of approximately 2,000 tonnes per year.
When combined with Williams’ existing off-gas processing at another third-party oilsands producer (Suncor Energy Inc.), 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.
Williams is not releasing the name of the oilsands producer with whom it is working. However, Canadian Natural Resources Limited’s Horizon upgrader expansion is scheduled to come on stream in 2013-14.