The company plans to invest C$311m ($319m) to expand its two primary facilities in Alberta to support the new agreement.
Under the agreement, Williams will upgrade its oil sands off-gas extraction plant near Fort McMurray and construct a de-ethanizer at the Redwater natural gas liquids-olefins fractionator near Edmonton.
The upgrades at Fort McMurray will allow Williams to include ethane and ethylene in the NGL/olefins mixture that the company extracts from the off-gas and delivers to Redwater for fractionation.
The new de-ethanizer at Redwater will then enable Williams to initially produce approximately 10,000bpd of an ethane/ethylene mix.
This will add to its current production of approximately 14,000bpd of a heavier NGL/olefins mixture that includes propane, propylene, butane, butylenes and condensate.
Under the terms of the new agreement, Williams is delivering the ethane/ethylene mix produced at Redwater into the Joffre Feedstock Pipeline (JFP).
Williams is currently constructing a 261-mile NGL pipeline from its Fort McMurray extraction facility to its Redwater fractionator that will have a capacity of 43,000bpd of off-gas NGL/olefins and is expected to be placed into service in April 2012.
Williams will be able to increase the capacity on the pipeline to 125,000 bpd in future with the installation of additional pump stations.
The expansions are expected to begin operating in first-quarter 2013.
