A midstream merger that will see Energy Transfer Equity (ETE) acquire The Williams Cos. (WMB) in a US$37.7 billion deal is linked to offshore operations in the US Gulf of Mexico.
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The Gulfstar spar. Image from Williams. |
The merger, which was approved by both boards of directors, will create the third largest energy franchise in North America and one of the five largest global energy companies.
“During the course of its diligence process over the last 10 weeks, the Energy Transfer family has identified significant commercial synergies. These synergies run across a broad spectrum, ranging from new revenue opportunities, improved operational efficiencies and performance, new capital opportunities and prioritization of existing capital projects. ETE expects that the anticipated EBITDA from these commercial synergies will exceed $2 billion per year by 2020 (or more than 20% of the estimated current pro forma EBITDA for the combined company) and will require overall incremental capital investment of more than $5 billion to achieve,” ETE said.
According to Simmons and Co., the transaction is expected to close in 1H 2016 subject to customary closing conditions, including approval by WMB shareholders and required regulatory approval under the Hart-Scott-Rodino Act.
On a consolidated basis, ETE’s family of companies owns and operates approximately 71,000mi of natural gas, natural gas liquids, refined products, and crude oil pipelines.
Williams owns and operates more than 33,000mi of pipelines system wide, and is connected to about 30% of US natural gas.
Of its assets, Williams also owns the Gulfstar floating production spar-based (FPS) system that is in use at Hess’s Tubular Bells in the Gulf of Mexico; four deepwater crude oil pipelines with a combined length of nearly 400mi, and a capacity of 475 MMb/d; and four floating production platforms with a combined daily inlet capacity of 1.2 Bcf/d of natural gas and 251,000 b/d of oil.
In the OE April 2014 edition, Stephen Whitfield said that Williams had no specific offshore location in mind when it conceptualized the system, it had to make it as flexible as possible to adapt to the different logistics of a given site. However, that all changed after Williams signed on for the Tubular Bells field, giving it parameters from which it could build and operate.
Gulfstar is a system with a classic spar hull connected to a three-level topside, with each deck: a main deck, a production deck, and a cellar. The hull was fabricated in an overlapping sequence to speed construction of the module. This design was supposed to speed up the time from the discovery of reserves to first production to about 30 months.
Costing an estimated $2.3 billion, Tubular Bells was designed in the ever popular “hub and spoke” delivery model. Under this layout, Gulfstar is the hub, the center to which all resources will eventually go. It will be connected to two subsea drill centers, which in turn will be connected to three subsea production wells and two water injection wells.
Gulfstar’s platform was installed at a depth of 4300ft. Its core module has the capacity to produce anywhere from 60,000 to 90,000 bo/d, but Hull expects to yield 120 billion bbl from Tubular Bells, with peak production estimates coming at 40,000 to 45,000 boe/d.
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