Williams Cos. plans to build a new processing plant in western Colorado to increase by more than fivefold production of natural gas liquids from gas extracted by the company in the region’s Piceance Basin.
The Willow Creek plant, with a capacity to process 450 million cubic feet of natural gas a day, is expected to begin operations in the third quarter of 2009, Tulsa, Oklahoma-based Williams said in a statement today.
Williams is building the plant in the fastest growing U.S. region for natural-gas production at a time when output of the fuel is declining in other parts of the country. The company said it almost doubled production of gas in the Piceance Basin over the past two years.
“It highlights the level of production they see from the area,” said Gordon Howald, an analyst at Calyon Securities Inc. in New York who rates Williams shares a “buy” and doesn’t own any. “It’s a good sign.”
The plant initially will be able to recover 20,000 barrels of natural gas liquids a day from Williams gas production, according to the statement. Output will later reach a high of 30,000 barrels. Existing plants can produce about 4,500 barrels a day of gas liquids such as ethane and propane, the company said.
Williams isn’t providing a cost estimate for the project, spokeswoman Sara Delgado said in an interview.
In a separate statement, Tulsa-based Oneok Inc. said its joint venture with Williams plans to spend $120 million to build a 150-mile extension to the Overland Pass pipeline to transport natural gas liquids from Williams processing plants in the Piceance Basin.
Williams, the biggest U.S. transporter of natural gas, has a 1 percent stake in the venture with an option to increase it to 50 percent and become the operator within two years of the opening of the pipeline.
Shares of Williams rose 12 cents to $28.52 in New York Stock Exchange composite trading. Oneok’s shares fell 19 cents to $45.76.
