Williams Partners Unveils Gas-Gathering Joint-Venture With Shell

   By Debbie Cai 
 

Energy company Williams Partners LP (WPZ) said it will form a joint venture with Royal Dutch Shell PLC (RDSA, RDSB) to provide gas-gathering and gas-processing services for production located in northwest Pennsylvania.

The Three Rivers Midstream venture will invest in both wet-gas handling infrastructure and dry-gas infrastructure serving Marcellus and Utica Shale wells in the area, Williams said.

Alan Armstrong, chief executive of Williams Partners' general partner, said Three Rivers will create a major supply hub in northwest Pennsylvania, with the added benefit of large-scale natural-gas liquids pipeline infrastructure and expanded market options to support wet-gas production in the area.

Three Rivers has signed a gathering and processing agreement for Shell's production in the area, including about 275,000 dedicated acres, Williams said. The joint venture also plans to pursue gathering and processing agreements with other producers in the liquids-rich areas of northeast Ohio in addition to northwest Pennsylvania.

Three Rivers also plans to construct a 200 million cubic feet per day cryogenic gas processing plant, which is expected to begin service by the second quarter of 2015.

Williams Partners, which holds midstream and interstate gas-pipeline assets, said it will initially own substantially all of Three Rivers Midstream and operate the assets, while Shell has the right to invest capital and increase its ownership prior to mid-2015. Williams expects its initial capital expenditures on the plant, not including the gathering system, to be approximately $150 million.

In February, Williams reported that its fourth-quarter profit decreased 29% due to a sharp midyear decline in natural-gas-liquid prices last year.

Shares of Williams Partners rose 0.9% to $53.25 in after-hours trading. The stock is up 8.5% so far this year.

Write to Debbie Cai at [e-mail]

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