North American energy firm
Williams Companies Inc.
) announced that it is planning to spend up to C$900 million to
construct a propane dehydrogenation (PDH) plant in Alberta,
Canada. The new facility is expected to boost Williams' Canadian
production of polymer-grade propylene.
Propylene is an important petrochemical raw material used for
manufacturing plastic. The upcoming PDH plant - touted as
Canada's first - will be capable of producing up to roughly 1.1
billion pounds of polymer-grade propylene per year initially that
can be doubled at a later stage. The facility is scheduled to
start operation from the second quarter of 2016, subject to
Management revealed that propane, which will be used as a
feedstock for producing polymer-grade propylene in the new PDH
plant, will be recovered from the oil sands offgas processing
operations of Williams, and also purchased locally.
The high-grade propylene will then be carried to the U.S. Gulf
Coast for selling to the petrochemical producers. Williams
expects the new PDH plant to manufacture one of the cheapest
propylene feedstocks in entire North America.
Tulsa, Oklahoma-based Williams is a premier energy infrastructure
provider in North America. The company's core operations include
finding, producing, gathering, processing and transportation of
natural gas. Williams divides its business into four segments:
Williams Partners, Williams NGL & Petchem Services, Access
Midstream Partners and Other.
We remain concerned about Williams Companies' high debt level,
which leaves it vulnerable to an extended drop in commodity
prices. As of Dec 31, 2012, Williams had long-term debt of more
than $10.7 billion, representing a debt-to-capitalization ratio
Williams currently retains a Zacks Rank #5 (Strong Sell),
implying that it is expected to underperform the broader U.S.
equity market over the next 1 to 3 months.
In the energy sector,
Helmerich & Payne Inc
Range Resources Corporation
Calumet Specialty Products Partners LP
) display better fundamentals and currently carry a Zacks Rank #1
CALUMET SPECLTY (CLMT): Free Stock Analysis
HELMERICH&PAYNE (HP): Free Stock Analysis
RANGE RESOURCES (RRC): Free Stock Analysis
WILLIAMS COS (WMB): Free Stock Analysis
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