Williams Partners Gulfstar One to Start in '14 - Analyst Blog

Energy infrastructure provider, Williams Partners L.P. WPZ reported that its Gulfstar One project, the first spar-based floating production system, is nearing completion in the eastern deepwater Gulf of Mexico. The project has achieved key construction milestones and made significant progress on a tieback expansion.

In February, the crew completed mooring the floating spar to the ocean floor, while Gulfstar's three-level topside structure was lifted and installed in March. Anchored 135 miles southeast of New Orleans in about 4,000 feet of water, the floating production system is likely to serve as a hub that accumulates production. Thereafter, the system will merge production handling services with oil and gas export pipeline services, which supply Williams' downstream oil and gas gathering and processing services.

On start-up, the Gulfstar's base design will generate about 60,000 barrels of oil per day and 135 million standard cubic feet of gas per day with additional tieback capacity. Currently, hook-up and commissioning activities are in progress. Gulfstar is scheduled to start serving anchor customers in the third quarter of 2014 and Gunflint in 2016.

In January, Gulfstar executed further agreements with Gunflint field owners – Noble Energy Inc. NBL, Ecopetrol America Inc., Marathon Oil Company and Samson Offshore, LLC – apart from the previously announced commitments.

The Gunflint tieback is planned and engineered with alterations expected to be completed after the base Gulfstar project is completed. The key components of Gulfstar were made entirely in the United States. This facilitates fast replacement of parts and reduces platform downtime.

The Gulfstar One project has been developed by Williams Partners, which holds a 51% interest in it. The remaining 49% interest is held by Marubeni Corporation.

Williams Partners currently carries a Zacks Rank #4 (Sell). However, there are Zacks Ranked #1 (Strong Buy) stocks in the oil and gas sector – Valero Energy Corporation VLO and Patterson-UTI Energy Inc. PTEN – that appear rewarding for the short term.