Williams Partners (NYSE: WPZ) continued to expand its footprint in the Marcellus shale this week as it reached an agreement to acquire Caiman Eastern Midstream LLC from Caiman Energy for $2.5 billion. The agreement, which also provides Williams Partners with an avenue to grow into the Utica shale, follows the company’s acquisition of the Laser Northeast Gathering System in the Marcellus from Delphi Midstream Partners last month.
The Caiman Eastern Midstream acquisition includes the Fort Beeler cryogenic natural gas processing plant near Cameron, West Virginia and the Moundsville processing and fractionation plant in Marshall County, West Virginia along with a related gathering system and a planned ethane pipeline.
“This acquisition continues to expand on Williams’ footprint in the Marcellus and we especially like that it is in the wet gas window of the play, allowing us to expand our NGL footprint. It’s a great opportunity for us because we like scale,” Frank Billings , vice president, Williams Partners, said at a press conference today at Hart Energy’s Marcellus Midstream conference in Pittsburgh, Pennsylvania.
He compared the potential for this acquisition with Williams Partners’ operations in the Picenace Basin. “We have large processing plants out west and we can bring that same operating capability to this play and help producers maximize their production through high reliability and over time lower costs because of our scale,” Billings said.
Williams Partners anticipates bolt-on acquisition opportunities related to the Caiman Eastern Midstream assets as the Marcellus continues to grow. “As this business grows over the next three to five years, we like our ability to increase our NGL production and as well as the potential for acquisitions for NGL handling facilities on top of the gathering and processing facilities that Caiman has started,” Billings said.
“The goal of every company is deciding where to go next and we realized that as the Marcellus and Utica shales began developing that we didn’t have the capability and capacity to do a lot of the necessary build-out such as long-haul pipelines, interstate pipelines and long-haul NGL facilities,” Jack Lafield, president and chief executive of Caiman Energy, stated during the press conference.
Caiman Energy was fortunate to enter the Marcellus at a time when the midstream wasn’t very active in the play because they would be building ahead of drilling by producers, according to Lafield. However, as the play has grown in size, the company realized it didn’t