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Williams plans exit from Alaska stage North Pole refinery, stake in trans-Alaska oil pipeline, gas stations and rest of Alaska operations all up for sale — but gasline could mean a curtain call Allen Baker PNA Contributing Writer
The familiar swirling logo of Williams Cos. Inc. could be gone from Alaska by the end of the year. The Tulsa-based company announced June 18 that its big refinery in North Pole, its 3.1 percent stake in the trans-Alaska oil pipeline, its gas stations and all the rest of its Alaska operations are up for sale. Also on the block is a refinery in Memphis.
But that doesn’t mean Williams has lost interest in being part of an Alaska natural gas pipeline. And it also doesn’t rule out a potential chemical plant here, according to Williams executives. Refocusing effort “We are in the midst of a refocusing effort, and the refineries don’t fit in with our strategic plan,” said Mark Wilson, vice president for corporate development for Williams in Tulsa. “It also tends to help our balance sheet restructuring efforts.”
Williams is expecting to receive somewhere in excess of $1 billion from the sales in Alaska and Memphis. Wilson wouldn’t say what percentage of that was expected to come from the Alaska assets.
The pipeline share alone could be worth a significant amount. Last year, Williams showed a profit of $17 million from the interest it bought in June of 2000. Varied Alaska assets In addition to the refinery and pipeline stake, Williams owns 29 Alaska convenience stores. It also has a 700,000-barrel terminal in Anchorage and a 20,000 barrel jet fuel terminal at the Fairbanks airport. The company is also a partner in an air cargo operation at the Anchorage airport.
The Alaska operations are profitable, and there are no big capital expenditures needed in the near future, Wilson said. The North Pole refinery has a capacity of about 220,000 barrels daily, about 60 percent of that being turned into jet fuel.
Gasline role still possible
While the company is exiting the Alaska market for now, Williams may be back as part of a consortium that could operate a gas pipeline from the North Slope, and perhaps to run a petrochemical plant.
“This doesn’t affect our interest in the gas pipeline,” Wilson said.
The gas line opportunity is at least eight years away, and “by the time it will be built, we hope to have a much stronger balance sheet,” said Michael Cathey, director of business development for Williams Gas Pipeline in Salt Lake City. “The producers are not envisioning this as a 2008 or 2009 project as we had expected.” Chemical plant feasible Williams also has been looking at building a petrochemical plant in Canada, Cathey says. Under the right conditions, it might build both.
“Our initial screening showed both are feasible,” he said. “We spent quite a bit of money looking at it more closely. In the second look, it still looks feasible at both the Alaska and Canadian locations.”
Once the pipeline is under construction, Williams will have some time to decide whether to put out the huge investment to build the petrochemical plant, and where.
“There are certain pluses to both the Alaska and the Canadian sites,” he said.
While Williams might have had some cost savings by running the refinery and chemical complex side-by-side, the company would still have needed more land to add to the 200-acre refinery site.
“There were certain synergies there, but the refinery will still be there and we obviously will have a relationship with the new owner,” Cathey said.
“There still may be some synergies.” Refinery market active Refineries have been changing hands at a rapid clip, and Williams should have no trouble selling the Alaska operations and the Memphis refinery, which has a capacity of 190,000 barrels a day. A pipeline and a couple of terminals are part of the Tennessee assets Williams wants to sell.
“We’ve received numerous expressions of interest and one unsolicited offer to purchase our refining and marketing businesses in Tennessee and Alaska,” Phil Wright, president of Williams energy services unit, said in a statement. “Our Memphis business unit made attractive profits during the first quarter of this year while many other refiners in the Lower 48 states reported losses.”
Williams managers wouldn’t say what companies were interested. Few changes expected Jeff Cook, who runs the North Pole refinery, said a new owner wasn’t likely to make big changes.
“Any buyer is going to look at the 500 Alaska employees who know Alaska and the assets here. Having people with the knowledge and expertise is pretty important,” he said.
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