Inter Pipeline has signed an agreement with pipeline company Williams and its master-limited partnership unit Williams Partners to acquire Canadian midstream businesses (Williams Canada) for C$1.35bn ($1.03bn).

Under the terms of the deal, Inter Pipeline will acquire the shares of Williams Companies' and Williams Partners' in Williams Canada.

Williams president and CEO Alan Armstrong said: “This transaction represents significant progress on a major component of the 2016 capital and financing plan we announced in January.”

Williams Canada’s assets include two liquids extraction plants located near Fort McMurray, Alberta, a fractionator near Redwater, Alberta.

The two extraction plants are designed recover approximately 40,000 barrels per day (b/d) of natural gas liquids (NGL) and olefins from the upgrader offgas.

The assets also include a fractionator near Redwater, Alberta and a pipeline system that connects these facilities.

With the deal, Inter Pipeline will also be responsible for the potential construction of a $1.85bn propane dehydrogenation (PDH) facility located near the Redwater fractionator.

Subject to final investment decision by the end of 2016, the facility is planned to be commissioned by in 2020.

Inter Pipeline expects the deal to provide a platform for material future NGL and olefin related growth opportunities while complementing its existing NGL extraction business.

Inter Pipeline president and CEO Christian Bayle said: "Consistent with our disciplined acquisition strategy, we are purchasing this unique and attractive business at a low period in the commodity cycle, and well below original cost.

“This positions Inter Pipeline to significantly benefit as energy prices strengthen."

Cash proceeds from the sale of midstream assets  will be used by both the companies to reduce borrowings on credit facilities.

Scheduled to be completed in the third quarter of 2016, the transaction is subject to approval under the Competition Act and other customary closing conditions.

Image: Inter Pipeline intends to strengthen its business. Photo: courtesy of puttsk/