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Caiman Selling Marshall Plants

$2.5 billion deal signed with Okla. company

March 20, 2012

By CASEY JUNKINS Staff Writer , The Intelligencer / Wheeling News-Register

MOUNDSVILLE - Caiman Energy will sell its Marshall County natural gas processing plants and other assets to Tulsa, Okla.-based Williams Partners for $2.5 billion, officials announced late Monday.

The two companies also are forming a joint venture to develop infrastructure in the ethane and oil-rich areas of the Utica Shale, primarily in Ohio and northwestern Pennsylvania, company information states.

Noting they believe there is "an estimated 300 trillion cubic feet of natural gas in place within a 35-mile radius" of the Caiman system, Williams officials expect the system to gather more than 2 billion cubic feet of natural gas per day by 2020. This would lead to production of about 300,000 barrels per day of natural gas liquids - ethane, propane, butane and pentane - by that time, as well.

 

Caiman Energy has made major infrastructure investments in Marshall County. These plants will be acquired by Williams Partners in a $2.5 billion deal.

"We’re very proud of the sizable rich gas system we’ve built in the Marcellus and the great relationships Caiman has developed with producers and the people of West Virginia," said Jack Lafield, president and chief executive officer of Caiman. "Williams has a unique ability to build on the value we’ve created in the Marcellus. They will serve our customers and the people of West Virginia with distinction."

Williams Chief Executive Officer and Chairman of the Board Alan Armstrong said, "We’re putting together the kind of infrastructure that makes drilling in the Marcellus even more desirable for producers because we provide large-scale infrastructure solutions that connect producers’ natural gas and natural gas liquids to the best markets.

"We expect significant long-term growth potential because the liquids-rich gas makes this area the most economical and top-performing play for producers in North America," Armstrong added.

Companies like Caiman and Williams - along with Dominion Resources and MarkWest Liberty - are known in the industry as processors, or "midstreamers." This is because the processing company accepts the "wet" Marcellus and Utica shale gas that drillers like Trans Energy, Gastar Exploration, Chesapeake Energy or CNX Gas Corp. draw out of the ground. This gas contains ethane, propane, butane, pentane and other substances, in addition to the "dry" methane. At processing plants, midstreamers separate the methane from the other substances so that the methane can be sold by utility companies, such as Mountaineer Gas or Columbia Gas.

The natural gas liquids are then sent from the processing facility to a fractionation facility. This plant separates the products from one another so they can be marketed, with the ethane possibly going to a cracker plant. With so much emphasis on local officials trying to attract an ethane cracker lately, Caiman developed its own plans for the ethane it will produce. The company committed to send ethane to Canada for use by the Nova Chemicals company at a cracker there, transporting the ethane to Sarnia, Ontario, via the Mariner West Project pipeline developed by Sunoco.