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WPZ Expansion Awaits Approval

Zacks Equity Research

A leading master limited partnership, Williams Partners L.P. (WPZ) has filed an application with the Federal Energy Regulatory Commission (:FERC) related to its Transco pipeline. The partnership aims to make another natural gas delivery point to New York City available from the Transco pipeline.

The Rockaway Delivery Lateral Project, likely to be commissioned during the second half of 2014, is estimated to supply 647,000 dekatherms per day of natural gas capacity to National Grid's gas distribution system in Brooklyn and Queens, New York. The project’s design offers supply flexibility and enhanced capacity to meet additional demand growth in the future.

The new 3.2 mile, 26-inch lateral will have around 2.9 miles of offshore pipeline and 0.3 miles of onshore pipeline. Construction work is expected to commence in late 2013, pending approval from FERC. The project is projected to cost about $182 million.

The favored passage intends to evade residential, commercial and sensitive environmental areas. Subsurface directional drilling technology would be used to construct about one mile of the pipeline from sea to shore so that the beach and near-shore areas along with the onshore portions of Jacob Riis Park are not affected.

The project will provide additional gas supplies to New York City which struggles to meet federal environmental standards and its own clean energy goals in its PlaNYC 2030.  

The 10,200-mile Transco pipeline system carries natural gas to markets across the northeastern and southeastern United States. Currently, the system capacity is about 9.7 million dekatherms per day.

The general partner of the partnership is owned and managed by Williams Companies Inc. (WMB). Williams Partners holds a Zacks #4, which is equivalent to a Sell rating for a period of one to three months.

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