Williams Does Second Midstream Deal with Caiman Energy

Midstream giant Williams Partners continues an aggressive push into the Marcellus and Utica Shale and continues to cozy up with Caiman Energy as well. Yesterday Williams announced it will contribute $380 million toward a new $800 million joint venture with Caiman and several other partners to develop pipelines and processing facilities for natural gas, natural gas liquids and oil in the Utica Shale region of northeast Ohio and northwest Pennsylvania.

Earlier this year Williams spent $2.5 billion to purchase Caiman subsidiary Caiman Eastern Midstream, giving Williams a major midstream presence in the Marcellus/Utica region in northern West Virginia, southwestern Pennsylvania and eastern Ohio (see this MDN story). The recurring theme for Williams’ latest jv and acquisitions seems to be, “Get thee to the wet gas.”

Yesterday’s press release from Williams:

Williams Partners L.P. today announced it will be a funding partner in a joint venture with Caiman Energy II to develop midstream infrastructure serving oil and gas producers in the Utica Shale.

Williams Partners, EnCap Flatrock Midstream of San Antonio, Highstar Capital of New York, and Caiman management anticipate investing approximately $800 million to develop natural gas, natural gas liquid and crude oil gathering and processing infrastructure. The area of focus will be the natural gas liquid- and oil-rich areas of the Utica Shale in Ohio and northwest Pennsylvania. Williams Partners’ anticipated share of the $800 million in potential development is approximately $380 million over the next several years.

“This new midstream venture can leverage the commercial relationships and success of Caiman’s management and investors, along with Williams Partners’ long experience in successfully constructing and reliably operating large-scale midstream infrastructure,” said Alan Armstrong, chief executive officer of Williams Partners’ general partner.

“Our producer customers will benefit from introducing the kind of comprehensive large-scale midstream solutions to the area that will make their positions in the liquids- and oil-rich Utica Shale even more valuable,” Armstrong said.

Jack Lafield, chairman and chief executive officer of Caiman Energy, LLC, made the following comments:

“We couldn’t be more pleased to work with such a well-respected company. Together with our other equity partners, Williams’ financial strength and experience allows Caiman Energy to continue to provide our producer customers with the best possible midstream solutions as they develop drilling locations in this exciting play. We see great opportunities in the Utica Shale and with the successful completion of this equity transaction, we believe we are well-positioned to expand into the Utica and elsewhere.”

The new Utica Shale joint venture will also benefit from close proximity to Williams Partners’ new Ohio Valley Midstream business. The Ohio Valley Midstream area of operation is northern West Virginia, southwestern Pennsylvania and eastern Ohio. Work is under way to expand existing physical assets, which include a gathering system and a processing facility. In addition, construction is underway on fractionation and additional processing facilities and there are plans to construct NGL pipelines.*

*Williams Partners (Jul 10, 2012) – Williams Partners, Caiman Energy II to Develop Utica Shale Infrastructure

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