The board of directors of North American energy firm, Williams Companies Inc. (WMB) has approved its Bluegrass pipeline project. On May 28, Williams formalized the joint venture with a master limited partnership, Boardwalk Pipeline Partners LP (BWP) for the development of Bluegrass.
The pipeline will carry natural gas liquids (NGL) to the growing petrochemical complex on the Gulf Coast from Utica and Marcellus shale plays situated in Ohio, West Virginia and Pennsylvania. The pipeline will also supply NGL to the growing petrochemical market in the U.S. Northeast.
In the first phase of development, the pipeline system will carry NGL at a rate of 200,000 barrels a day from the producing regions of the three aforementioned states. In the second phase, in order to support growing market demand, the capacity of the pipeline will be doubled to a rate of 400,000 barrels a day, by the addition of extra pumping capacity.
Per the deal, a new pipeline will be constructed to carry NGL from the producing regions of Ohio, West Virginia and Pennsylvania to the Texas Gas Transmission system of Boardwalk, based in Hardinsburg, Ky. Additionally, a fractionation plant and NGL storage facilities will be developed in La. Moreover, the companies also have plans to build a new liquefied petroleum gas terminal on the Gulf Coast to better access international customers.
The proposed pipeline is expected to be operational in the second half of 2015, subject to the fulfillment of all the required conditions. However, the cost of the project was not disclosed by any of the companies.
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.
Meanwhile, one can look at other energy production/pipeline entities like Oiltanking Partners LP (OILT) and Cheniere Energy Partners LP (CQP) as attractive investments. All these firms sport a Zacks Rank #1 (Strong Buy).
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