Williams Explores Expansion of its Facilities in the Canadian Oil Sands

Williams will explore the expansion of its facilities in Canada to process an expected significant new source of off-gas associated with Alberta's oil sands production. The company also will study the extraction of high-value ethane from current and future off-gas streams in the same producing area.

Williams since 2002 has operated two facilities in the heart of Alberta's oil sands-producing region. Significant quantities of off-gas are a by-product of the process of upgrading oil extracted from the sand. At its Fort McMurray and Redwater facilities, Williams recovers and purifies natural gas liquids and olefins from the off-gas that are valuable to the petrochemical industry.

Williams will evaluate the construction of a cryogenic processing plant; expansion of its existing Williams' Redwater fractionator north of Edmonton, Alberta; and addition of a de-ethanizer to the Redwater complex. As contemplated, the de-ethanizer could begin operating in stages starting as early as 2010; the new off-gas processing plant could start up in 2012.

"As the only company with facilities in service to recover olefins and natural gas liquids from the Canadian oil sands off-gas, Williams is uniquely positioned to provide these services," said Randy Newcomer, vice president of Williams. "Recovering, rather than burning the liquids contained in the off-gas, not only increases the value of the off-gas, but also results in a significant environmental benefit. We look forward to completing the studies necessary to verify the feasibility of these growing opportunities in Alberta."

Williams' current operations at Fort McMurray and Redwater reduce emissions of carbon dioxide (CO2) -- a greenhouse gas -- in Alberta by approximately 219,000 tons each year. The operations also cut annual emissions of sulphur dioxide (SO2) -- a contributor to acid rain -- by more than 3,200 tons. By processing the off-gas, Williams' facilities annually prevent the release of CO2 emissions equal to the carbon footprint of 44,000 Albertans.

Williams expects that the contemplated expansion of its off-gas operations and ethane removal would further decrease CO2 and SO2 emissions associated with oil sands production.

"Williams is excited about pursuing opportunities to expand our reliable off-gas service offerings to Canadian oil sands upgraders. We take pride in what we do as it benefits our customers, the environment, Alberta's economy and Williams' shareholders," said David Chappell, regional vice president of Williams in Canada.

Williams anticipates several months of engineering studies related to the facility expansions. As contemplated, corporate approvals and the execution of commercial agreements would follow the study and evaluation process.

Williams recently signed non-binding letters of intent specific to expansions it will evaluate. The company's evaluation of ethane-recovery facilities is the subject of such an agreement with NOVA Chemicals Corp.