Nova Chemicals will further expand its petrochemicals footprint in the US Gulf Coast after agreeing to acquire Williams Partners' Geismar, Louisiana, olefins assets in a $2.1 billion deal, the companies said Monday.
The deal marks Nova's second planned investment this year in US Gulf Coast petrochemicals production.
Nova's cash deal with Williams includes Williams' 88.46% share in the 885,000 mt/year Geismar steam cracker, about 525 acres of land adjacent to the plant, and Williams' interest in the ethylene trading hub in Mont Belvieu, Texas. Sabic holds the other 11.54% of the olefins plant.
It remains unclear what Nova will do with the 525 acres on the site, but market sources have said previously that an acquiring company would likely pursue the construction of an ethylene derivative plant.
Representatives for Williams, Nova and Sabic did not immediately return requests for further comment.
Additionally, Williams has agreed to provide a long-term supply and transportation for feedstocks to the Geismar olefins plant via Williams' Bayou Ethane pipeline system in the US Gulf Coast.
Nova and Williams expect to close the deal in summer 2017.
A source with knowledge of operations said the transfer process will finalize in June, with some progress already starting to take place.
"A key component of our growth strategy is to expand to the US Gulf Coast and leverage next generation technology to better serve our customers in the Americas," Nova President and CEO Todd Karran said. "The business allows us to diversify our geographic footprint benefiting from access to significant US shale gas reserves and well established petrochemical and supply chain infrastructure."
Nova has been showing interest in the US Gulf Coast after announcing a joint-venture project last month.
Borealis, Nova Chemicals, and Total Petrochemicals and Refining USA signed a preliminary agreement in March to build a 1 million mt/year light feed cracker in Port Arthur, Texas, and a 625,000 mt/year polyethylene plant in Bayport.
The companies intend to complete the formation of that joint venture later this year and hope to start the cracker and polyethylene plant in 2020.
Williams Partners said the company would use the $2.1 billion to pay an $850 million loan and finance investments as the company focuses and expands its portfolio on fee-based natural gas infrastructure.
"The Williams Olefins transaction and these announced new supply and transportation agreements fortify our focus on natural gas market fundamentals, reduce our commodity margin exposure and secure our fee-based Gulf Coast transportation business -- all consistent with Williams' strategy to allocate capital to its core, natural gas-focused business," Williams Partners CEO Alan Armstrong said.
