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Williams Partners LP (NYSE:WPZ)

Q4 2012 Earnings Call

February 21, 2013 09:30 am ET

Executives

John Porter – Head-Investor Relations

Alan Armstrong – Chairman, Chief Executive Officer

Don Chappel – Chief Financial Officer

Randy Newcomer – Senior Vice President

Frank Billings – SVP, Northeastern G&P Operations

Frank Ferazzi – SVP, Gas Pipelines

Analysts

Christine Cho – Barclays

Holly Stewart – Howard Weil

Faisel Khan – Citi

Brad Olsen – Tudor Pickering

Ted Durbin – Goldman Sachs

Carl Kirst – BMO Capital

Craig Shere – Tuohy Brothers

Sharon Lui – Wells Fargo

TJ Schultz – RBC Capital Markets

Becca Followill – U.S. Capital Advisors

Selman Akyol – Stifel

Operator

Good day, everyone, and welcome to the Williams and Williams Partners Fourth Quarter 2012 Earnings Conference Call. Today’s conference is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Mr. John Porter, Head of Investor Relations. Please go ahead, sir.

John Porter

Thank you, Gwen. Good morning and welcome. As always we thank you for your interest in Williams and Williams Partners. Yesterday afternoon, we released our financial results and posted several important items on our websites, williams.com and williamslp.com.

These items include yesterday’s press releases with related schedules and the accompanying analyst packages, a presentation discussing these results, guidance updates, and growth opportunities with related audio commentary from our President and CEO, Alan Armstrong, and an update to our data books which contained detailed information regarding various aspects of our business.

This morning Alan will make a few comments and then we will open the discussion up for Q&A. Rory Miller is here from our Midstream business. Frank Ferazzi is here from our Gas Pipelines business. And our CFO, Don Chappel, is also available to respond to any questions.

In yesterday’s presentation and also in our data books, you will find an important disclaimer related to forward-looking statements. This disclaimer is important and integral to all of our remarks and you should review it. Also included in our presentation materials are various non-GAAP measures that have been reconciled back to Generally Accepted Accounting Principles. Those reconciliation schedules appear at the back of the presentation materials.

So with that, I’ll turn it over to Alan Armstrong.

Alan Armstrong

Great. Thank you, John, and thanks to all of you on the phone and webcast who have joined us this morning. I certainly looking forward to your questions. Before we open up the phone lines, I want to take the opportunity to briefly touch on a few key themes for the Williams and Williams Partners investment story.

In short, we’re rewarding investors now with strong dividend and cash distribution growth through the guidance period and we are expanding our business to create continuing value growth in a very resilient future dividend and distribution growth.

First, let’s take a look at our fourth quarter performance. We turned in solid results in line with our third quarter guidance, despite a natural gas liquids margin environment that’s dropped even faster than we expected.

To give some scale to that drop and to the head winds we were facing, it’s important to understand that our fourth quarter NGL margins were down 46% from the prior year. Margins took another 8% hit from what we thought were low third quarter levels. And from a financial perspective, our fourth quarter NGL margins were off about $75 million compared just to the midpoint of the forecast that we shared at the third quarter results.

Much of this didn’t show up in the unit margin because we didn’t produce ethane when it was negative – in the negative margin territory. So, what you saw out there is a little bit higher unit margin than you might have expected, but at lower volumes as a result of that ethane rejection.

We’ve provided some detail in our slides regarding the positions that allowed us to overcome these very low NGL margins, but here are some of the highlights there. First, we successfully are growing our fee based revenues in this business for Williams Partners. In the Midstream segment, we generated fourth quarter fee based revenues 18% higher than a year ago. For both the Midstream and Gas Pipeline business, we generated fee based revenues that were up 5% from the third quarter to the fourth quarter.

And second, we continue to benefit from the natural hedge against ethane exposure that our olefins business creates. Williams Partners benefited in the last two months of 2012 with the acquisition of the olefins business and there is even greater benefit for WPZ ahead with the well-timed expansion of the Geismar facility expected in service later this year.

This combination supports our ability to reward investors with strong growth and cash dividends and cash distributions. We are reaffirming our guidance at midpoint to grow Williams’ cash dividend by some 20% with this year and – for both this year and next year. And for Williams Partners, we are reaffirming our guidance at midpoint to increase the cash distributions we pay unit holders by approximately 9% in both 2013 and 2014.

When we add our large platform of growth capital projects and the rapid growth in cash distributions we’re expecting from our recent investment in access midstream, what you have is a value creation engine that is powerful, durable, and resilient and will continue to grow for many years to come.

In our earnings announcement yesterday afternoon, you also saw that we are lowering our 2013 and 2014 earnings and cash flow guidance. We expect the growth in our fee-based business will partially offset the effect of sharply lower ethane and propane prices, and ethylene prices in 2014. And we will see Williams Partners benefiting from the late 2012 acquisition of Williams’ olefins business and a significant expansion in our Geismar facility in the fourth quarter. And I also would remind you that we have quite a bit of collared contracts that are expiring here in the first quarter of 2013 and of course those allow us to get even better exposed to the weak ethane price and continue our short position at Geismar there on ethane.

Our coverage at WPZ is certainly being impacted by the heavy load of investing about $12 billion in growth capital during the three-year period from 2012 through 2014. But we’re deploying that capital towards a vast array of great growth projects across our operating areas from the Marcellus and Utica Shales in Canada, to the Eastern Seaboard and the deep water Gulf of Mexico.

These are projects that we know and understand. Many are well into the construction phase. And the essential ingredient in these value-creating projects is largely within our reach. It’s our execution. If I can direct you for future reference to Slide 13 in the quarterly presentation materials that are posted on our websites, you’ll see here exactly where we are spending that $12 billion and where it is – and when exactly it begins to contribute to our cash flows.

I think you’ll agree that these projects are very strategic. They are large scale, and they move us even more significantly toward a business mix dominated by revenue stream that can support strong continued growth in dividends and distributions, and these growth investments largely start contributing in meaningful value in 2015 and beyond. So there is much good yet to come with these major strategic investments that we continue to invest heavily into.

This natural gas infrastructure super cycle is creating tremendous opportunities for North America, our industry, and importantly, for Williams and Williams Partners. We are aggressively pursuing and executing on these opportunities to deliver shareholder value for years to come and we remain committed to the idea that there is a lot of value associated with this large scale infrastructure.

Now let’s open the phone lines and I’ll let others on our executive leadership team help answer your questions this morning.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) And we’ll take our first question from Christine Cho with Barclays.

Christine Cho – Barclays

Good morning.

Alan Armstrong

Good morning.

Christine Cho – Barclays

How are you guys planning to fund the coverage shortfall at WPZ in ‘13? Is it going to be with debt, or are you going to do IDR waivers? And can you just remind me, what has been disclosed to date for IDR waivers? Is it $105 million in 2013 and $16 million in 2014?

Don Chappel

Christine, this is Don Chappel. In terms of the exact funding plan, we’ve not disclosed that, but we do have a lot of flexibility around that. It will be a combination of debt and equity. You know, certainly Williams is well positioned to support WPZ in many ways and – but we have no additional IDR waivers contemplated at this time. The IDR waivers that are currently have been granted are very modest and I think you mentioned those numbers and they just go out for two years.

Christine Cho – Barclays

Okay. Can you just talk about what your plans are for the extra cash at WMB otherwise? Especially with the...

Don Chappel

We have a number of investment opportunities in the NGL pipeline, Petchem pipeline space where Alan has laid out strategy earlier about building that business, and Alan can speak to that again. So that’s an opportunity and the balance, we have some flexibility. And – so we’ll look at the facts and circumstances and determine what the best use of that excess cash is.

Christine Cho – Barclays

Okay. Can you give a little more detail about how the investment in ACMP brought your cash taxes to zero in 2013 and 10% in 2014?

Don Chappel

Sure. Our investment – again, there’s an allocation for tax purposes. The inside basis at ACMP did not change. Our investment was allocated between hard assets and intangibles. In terms of the hard assets, they enjoy accelerated depreciation and the intangibles enjoy straight line depreciation, but it’s really the depreciation of that investment that’s creating a very large tax deduction for us, which over the next few years will significantly lower our tax rate. In addition, the January 2013 Fiscal Cliff legislation included an extension of bonus depreciation and given the large amount of capital that we continue to invest, that’s pretty significant as well.

Christine Cho – Barclays

Okay. And then I noticed that your Geismar expansion, the start date was pushed back by a quarter, can you talk about what’s going on there?

Alan Armstrong

I’ll address that and then I’ll ask maybe Rory to hit a little harder on that. We really didn’t push it back as much – that’s not really the cause in the drop in volumes there, but we are giving ourselves some room for the tie-ins and some expanded tie-in work on there. So, I would just say we’re being fairly conservative and knowing that when you go to startup of facility like that, often there’s bobbles and interruptions as you try to do that, and we’re planning for that rather than explaining that later. So that’s really the purpose for that. But really, the startup is still scheduled right into the October timeframe.

Christine Cho – Barclays

Okay. And then you talked about how you started to recently see ethane rejection during the fourth quarter. How much did you reject in 4Q? And then also, you talked about how you’re assuming that all your equity volumes are going to be rejected in first quarter of 2013. What does your guidance assume for the rest of the year?

Alan Armstrong

Yeah. Let me take a look at that on fourth quarter. I know the first quarter of 2013, we’ve got rejection planned for the entire period, but if you can hang on just a second here. Fourth quarter, yeah, looks like we had about two weeks to three weeks of ethane rejection.

Don Chappel

Maybe just – this is Don Chappel – just related to that, I would just refer to you slide number eight in our deck that illustrates the declining ethane margin with lower frac spreads, but the widening of crack margin at Geismar. And I’d note there that our assumed about $0.06 of margin there, that equates to about, I think, $27 million of remaining ethane margins.

So we have very little ethane exposure left. And in fact, as ethane prices go lower, that $27 million does not include the benefit of Geismar’s margins expanding. So if you look at the sensitivities in our data book, you can get some sense of the combined effect. But again, there’s only $27 million of total ethane margin assumed in 2013. In our data book, we have the same slide for 2014 and you’ll see with the Geismar expansion, while the ethane margins assume to be a bit wider, the Geismar expansion completely mitigates that.

Christine Cho – Barclays

Okay.

Don Chappel

And I mentioned to some investors before, if ethane prices go to the point that we’re in full rejection and go even lower, then, we’ve taken all the pain on the ethane margin and then Geismar starts to see even greater gains as its costs go down.

Christine Cho – Barclays

Right. And then last question for me, this is more of an accounting question, but how are you calculating the adjusted segment profit for Access Midstream Partners? Is that just net income that you expect at ACMP multiplied by your ownership? It just seems a little light. I’m just trying to figure out, do the Class C units participate in earnings, but not the class B, is that how that works?

Don Chappel

Our proportionate share of their equity earnings and then, again, our purchase – our purchase price was allocated in part to intangibles. Some of the intangibles are contracts and we have depreciation, or amortization of that. That totaled about $65 million in both 2013 and 2014.

So earnings are reduced by that amortization expense and you can see from a cash flow standpoint, if you add that back, you get to a segment profit plus DD&A, or an EBITDA number, our pro-rata share, it’s $65 million higher than the earnings. So I think we’re on – in terms of our share, our share from more of a cash flow perspective, segment profit plus DD&A, so it’s not actually distribution, but is 103 – $103 million in 2013, $160 million in ‘14.

Christine Cho – Barclays

Okay. That makes sense. Thank you.

Don Chappel

You’re welcome.

Operator

We’ll take our next question from Holly Stewart with Howard Weil.

Holly Stewart – Howard Weil

Good morning, gentlemen. Just a couple of quick questions. First, maybe start with the macro. Can you just give us a little color on what you’re seeing right now in the ethane and propane markets? And anything maybe nearer term that could drive pricing? You probably know better than most that most of the ENPs right now are forecasting ethane rejection for most of 2013.

Alan Armstrong

Yeah, I think the market on the ethane side continues to struggle to balance itself with a lot of new projects coming on, continuing to come on, major NGL pipelines, major fractionators continuing to come on, that will continue to provide plenty of supply into a market that is going to be slow to grow. I think obviously with our expansion and other expansions, we will see a little bit of growth this year but in – is probably couple of years out for, we really see the market try to catch up with all that supply on the ethane side. So we really don’t see a lot of upside for us. The best thing that can happen for us is, you know, probably volatility here in 2013 and then a weak, very weak ethane price in 2014. And if that happens, then we’ll have some upside to what we have forecasted here for 2013 and 2014.

On the propane side, I would say the fundamentals are a little more positive there. Certainly, lot of cracking going on, right now. Propane is at a price that is encouraging a lot of cracking of propane and our cracker is running rich and probably any other light-end cracker is running rich and running propane in it right now as much as they can, because propylene prices are so high that that’s making that a favored feedstock.

So that, combined with hopefully some larger export facilities coming on later this year, I think that will start to balance the fundamentals a little better on propane. So, I would say a little bit of upside to propane and – but still that market has lots of supply still available in it.

I would say this, that there is a lot of propane that is on the market that can be trucked and railed and so forth that is already in the market supply versus ethane that is being rejected and not on the supply scene.

Said another way, when a lot of these big NGL pipelines come online, they are going to have capacity for ethane, but a lot of that propane is already getting captured in local fractionators and being trucked and railed. So, it won’t be as large of an incremental supply in the market when that infrastructure comes online.

Holly Stewart – Howard Weil

Okay. And then maybe just sticking with propane, what’s the latest on the PDH project?

Alan Armstrong

Very excited about that project. Lot of things coming together quickly on it, and we’ve been – we’ve contracted with an engineering firm to do a feed study on it and I would say we look forward to accelerating the decision on that project with continued strong fundamentals for low propane prices in Canada with very little out for the propane out of Canada and as well, a lot of interest in the propylene supplies that we already have, as you’ll recall from our red water fractionator and splitter, we already have, as you’ll recall from our red water fractionator and splitter, we already have pretty large propylene supply there. This would add to that and starts to get to a level that it could attract derivative investment downstream, which would really be a homerun for us because it would take that rail – some of that rail cost out that we’re investing in today into the Gulf Coast.

Holly Stewart – Howard Weil

Okay. So maybe a decision by year-end?

Alan Armstrong

I would say it would be quite a bit sooner than that.

Holly Stewart – Howard Weil

Okay, great. And then appreciate the additional Marcellus related detail on your systems and expansion plans. I guess bigger picture, what are the production bottlenecks today?

Alan Armstrong

Yeah, I would say that for the most part, it is around liquids, particularly, for instance, in the wet Marcellus and in the West Virginia area. That production has a lot more condensate and is a lot richer than really anybody I think expected certainly and we expected anyway speaking for ourselves and I think for the producers as well. And so lot of the facilities there haven’t been designed to be able to handle all of those liquids, so there is a lot of redo work going on up there and there is a lot of production that is sitting, waiting behind infrastructure on both our facilities and other people’s facilities as well.

And so we’re working hard to overcome that, but I can tell you that we have a lot of frustrated producers sitting behind our production and obviously we’re anxious to get things remedied and bring it online as well. But there is a significant amount of production that is curtailed either by lack of connection or in some cases just unreliable operations where the pipelines continue to fill up with liquids and shut in the gas production.

Holly Stewart – Howard Weil

And is there more volume on a particular system of yours that’s backed up?

Alan Armstrong

Yeah, the Ohio valley midstream is really the one that’s curtailed. The other systems are running fairly well. We have had a few struggles in getting the laser pipeline up and running, and so we’ve had a little bit of curtailed volume in the northeast. But as you can see, it’s not curtailing it a lot because you can see how fast the volumes have come up, 80% year on year there. So hard to say it’s heavily curtailed, but there is some curtailment there on the north end of the laser system.

Holly Stewart – Howard Weil

Okay. And then one last one, I promise. Just a clean-up. What was your 4Q ethylene cracker spread? And then full year as well that you realized?

Alan Armstrong

Randy, do you want to take that?

Randy Newcomer

Give us a moment to look that up so we can come back.

Alan Armstrong

Holly, was the question what our ethylene crack spread was at Geismar?

Holly Stewart – Howard Weil

Yeah, for 4Q, and then full year if you’ve got it and that’s it for me so you can pass it on.

Randy Newcomer

Yeah, full year was $0.40. I don’t know what just the quarter was. Full-year spread was $0.40.

Holly Stewart – Howard Weil

Thanks, guys.

Alan Armstrong

Thank you, Holly.

Operator

We’ll take our next question from Faisel Khan with Citi.

Faisel Khan – Citi

Good morning.

Alan Armstrong

Good morning.

Faisel Khan – Citi

I understand all of the issues surrounding lower commodity prices and I appreciate the comments last night on your Podcast on the constraints you’re having in the Marcellus. I was wondering if you could quantify some of those constraints. It seems like, if we look at your presentations in the past versus the presentation you put out last night, that your volume assumptions for 2013 rather than Marcellus and Utica, are lower than what you guys had anticipated previously when you looked at these assets last year. Can you quantify for us exactly what’s going on? And then I have a follow-up question to that.

Alan Armstrong

Sure. I’ll ask Frank Billings to take that question.

Frank Billings

This is Frank Billings. I’d say if we were going to quantify today, the volume kind of curtailment or issues that we’re having in the Ohio Valley, I could put that at about 100 million to 150 million a day of volume that we have that the producers could be producing into our gathering systems. You know, for the forecast period, we’re moving our volumes back to address kind of both the operating issues that we’re experiencing in OVM and then certain producers drilling investment to better align their drilling dollars with getting the best netbacks for commodities produced. So I think that’s the thing that’s driving our volume forecast today and, in that part of the northeast.

Faisel Khan – Citi

If I’m looking at your 2013 and 2014 guidance for volumes, you would say that those numbers have been curtailed by about 150 a day?

Frank Billings

I think that’s what’s hitting us today. Our expectation is we would be getting those volumes back online, but we have some operational things we need to solve and some asset modifications that we have to make at some of the central receipt points in the field so that we can get that volume flowing. But that volume’s available to us today. We just have to get some of our assets better situated to handle the condensate volumes and get the – so that we can get the production flowing consistently.

Faisel Khan – Citi

Okay.

Alan Armstrong

Yeah. I would say in general there, we’re very encouraged with the resource and the value it can deliver to the producers, but there are a lot of infrastructure constraints, including, you know, both the upstream side and as well the downstream market side. So us continuing to develop infrastructure for the NGL market outlets and the condensate outlets, it’s critical to the success of the producers.

And so I think even though there’s already this amount of production sitting and waiting, I don’t think they’ll continue to drill so robustly if we don’t start to provide the market outlets up there in an unconstrained way and we’re certainly working very rapidly on that. So, a lot of great opportunity. The good news is, it’s a great resource and I would just say it’s even better than most people thought and therefore, it’s requiring some expansion – pretty rapid expansions on the market outlets and the upstream infrastructure.

Faisel Khan – Citi

Okay. Alan, do you worry about basis kind of narrowing in the Marcellus and Columbia pool area? It seems like we’ve basically gotten close to parity to hub in some situations. It looks like we actually moved into a negative basis in that region. Do you worry about that, in that kind of crimping production volume growth?

Alan Armstrong

Well, I think what you’ll see – I think it will be hard to see what the actual basis differential. But the answer to your question is yes, we’ve got to continue to open up market outlets for both the gas and the liquids, but I would tell you right now probably the liquids is the bigger driver on that. But I think what you really are going to see are kind of inter-regional spikes and so it’s not just what you could see as an East Dominion price or a Columbia price. It’s really going to boil down to inter-regional prices and what prices people are actually getting paid.

Now, if they have firm transport out of the area and get into Zone 6 on Transco, that’s a beautiful thing right now for somebody. But obviously that capacity is limited and so I would just say I think it’s very, very spotty up there and I don’t think those basis differentials really tell us the whole story for what producers are getting for the gas right now.

Faisel Khan – Citi

Okay. And then on the western volumes, is anything changed in your guidance or expectations in the west for this year versus what you had expected previously?

Alan Armstrong

Yeah, pretty limited change on that I believe. And, you know, continued – I would say the one thing that I’m aware of that’s changed is – certainly embedded in our guidance at this point, though, is we did have a lot of production froze off in the first quarter, not from our facilities for the most part, but certainly producer freeze in the San Juan Basin and some in the Wamsutter area. And so we certainly saw some impact here in the first quarter on fee-based volumes there.

Faisel Khan – Citi

Okay, and then last question for me, on the – on the quarterly comments that you have in your press release, you talked about earnings being impacted by increased costs and lower NGL margins. Can you just give us an idea of what you talk about, what do you mean by increased costs?

Alan Armstrong

Well, certainly getting all these businesses started up is a heavy load. Developing a lot of these projects is a heavy load. So for instance, you see a little spike in costs in Canada, for instance, and lot of that, of course, is in developing a project like a PDH project, so we’ve got a lot of upfront development expenses. You’ll notice that we’re pretty conservative how we book that. You’ll notice in the fourth quarter, we – in the gas pipeline segment, we took a $19 million reduction in expense that basically was expenses that we had on capital projects earlier that we don’t capitalize until we know that project’s going to come through.

And so, so in other words, we expensed those and hold them in an account until, until we’re sure the project’s approved and permitted. And so that’s, that’s where some of that kind of expense came from. So when we’ve got a big heavy capital budget like we have right now, a lot of the expenses in developing those projects weigh heavy against our expense line until those projects are capitalized.

Faisel Khan – Citi

And would you say those higher expenses are running through your numbers right now are higher than what you guys had previously envisioned in your last guidance?

Alan Armstrong

I don’t think there’s too much more than what was in the last guidance, maybe on the PDH project. But again, if we approve that this year, then that expense gets capitalized, going forward

Faisel Khan – Citi

Okay. Fair enough.

Don Chappel

So to be clear, the phenomena that Alan mentioned in the fourth quarter is unique to our regulated gas pipeline business. Where in that business, you expense it until you have a probable asset and then once it becomes probable, you can actually capitalize previously expensed projects. In non-regulated business, you expense it and then when you have a probable project, you expense going forward, but you can’t go back and call it reclaim what you previously expensed.

Faisel Khan – Citi

Understood. Great. Thanks for the time, guys. Appreciate it.

Don Chappel

Thank you.

Operator

We’ll go next to Bradley Olsen with Tudor Pickering.

Brad Olsen – Tudor Pickering

Hi, good morning, everyone.

Alan Armstrong

Good morning.

Brad Olsen – Tudor Pickering

Quick question on – and I realize that it’s a similar question to one that’s been asked already, but when you talk about the volume impacts, the limited volume impacts between the guidance provided on the third quarter call and the guidance provided for the fourth quarter, can you quantify in terms of either segment profit or EBITDA, the expected impact from volumetric declines either in the western or the eastern portions of the midstream business on segment profit or EBITDA in 2013 and 2014?

Alan Armstrong

Yeah, I think in the – I think the $150 million or so that Frank talked about, along with some other small things, I think is about $85 million, maybe $80 to $120 million in total there is about what’s in there.

Brad Olsen – Tudor Pickering

Okay, great. And one of the, I guess, notes in the presentation when you announced the access transaction and, you know, mentioned again in your fourth quarter materials, is the potential NGL pipeline project out of the Marcellus. And I guess I’d be interested in your thoughts about how heavy NGL pipeline out of the northeast might potentially impact demand for local fractionation. And to the extent that a pipeline might reduce the demand for local kind of northeast sided fractionation, how a potential pipeline project may be underwritten by Chesapeake volumes, would impact your plans for the development of the Cayman or Ohio Valley Midstream assets?

Alan Armstrong

Yeah, that is an excellent question. And I’ll tell you, we have a very good vantage point, as you can imagine, given our investment in ACMP and our investment in Blue Racer. We have a very good vantage point up there right now down around the degree of fractionation and the degree of liquids that’s available from this area. And I will just tell you, I don’t think that local fractionation is the answer up here. It is certainly going to overwhelm these markets and something large scale is going to need to be built. And even frankly, as it supports an ethylene cracker that Shell has announced and others have talked about, that also – having a big raw make line provides a lot of flexibility in terms of ethane access back and forth between those markets. And so we think that something definitely needs to be done there and we’re working very hard on that.

You heard Don mention earlier, when asked about what we were going to do with all the extra cash at WMB, and based on both continued cash distributions, as well as – I think when you do the math on it, you’ll see there’s quite a bit of extra cash distribution there, particularly in 2013 and 2014, given the tax rate and the performance in Canada.

And so that is a very interesting place for us right now and I’ll tell you, we have teams working that very hard. And it’s not as simple as just building a raw make pipeline into the Gulf Coast. There’s a tremendous amount of issues about where you land that product and having the distribution network to distribute that product into the market and into big market outlets, as we go forward.

And so I think it -- if it was just as simple as just raw make pipeline, we would probably be past that at this point. But there’s quite a bit of work we’re doing on the distribution and storage end.

Brad Olsen – Tudor Pickering

Got it. And given your comments, that fractionation will likely overwhelm local demand in the Northeast, does that make your Ohio Valley development more biased to focusing on just deethanization opportunities or maybe less focused on the fractionation and more focused on the gathering and processing side of things?

Frank Billings

This is Frank Billings. I’ll tell you, it’s a very good question. I think what we see relative to your fractionation investment is that Williams will still have the opportunity to make those fractionation investments. I think what we’re really evaluating is the market location for those fractionation investments.

The producers that we have behind our OBM assets are going to be looking for a portfolio of markets to get into and I think we’re well positioned to provide local market opportunities for those producers that want to have access to those markets, but then I think we’re also going to be able to provide Gulf Coast markets and Gulf Coast access. So we’re trying to position the producer sets that they can maximize the value of their netback and we feel like we’ll still be able to make those investments. It may just be in different markets.

We are looking at a high OVM, and we think in this marketplace in the northeast, we think there’s opportunities to have some customized solutions or customized infrastructure investments that allow Shell and others that are looking at chemical expansions to have the ethane that they need and give them ethane supply certainty so they can make their investments and then we’re looking at producers in Canada that want to have the condensate. So we’re looking at ways to consolidate our commodity sets that they can have access to those and then obviously the local market.

We’ll look at the propanizer investments to the extent that the propanization option makes sense. But with access to the Gulf Coast, you’re going to see – you’re going to start to see those different commodities being sold into those markets based on the best netback at that time and I think what we’re doing with the NGL infrastructure is providing the best opportunities for our producers and we think that’s advantageous for them long-term. But it also thinks it allows for us to place some pretty strategic investments in that area, as well as the Gulf Coast.

Brad Olsen – Tudor Pickering

Great, and just one last question for me. Given the fact that you guys have made moves in, say, Western Canada to take an area that is – that’s long propane and create your own solution to that with the PDH facility. When you look at the Northeast, really Williams is pretty uniquely positioned in the sense that you are probably the only operator either midstream or upstream up there who has the know-how – who has got the access to liquids volumes on the upstream side, as well as the know-how to execute an olefins or petrochemical project.

Given the fact that I would say the noise out of Shell sounds like they are probably a little bit more slow-moving and conservative than folks who are long ethane producers, who are long ethane in the northeast would like. Isn’t there an opportunity for Williams to get involved on the petrochemical side and maybe preempt a third party petrochemical project by building your own or JVing with one of those companies?

Alan Armstrong

Yes, I would just say first of all, on you focus on the petchem side is to continue to provide market outlet for both our product and for our producers’ product and not to go headlong into the petrochemical business and so I think it’s always important to remember that, that we see that as a great hedge to our business and we think it’s important, an important part of a midstream company’s role today with all the independent producers that we have, to develop the infrastructure in the market outlets.

And so while 20 years ago you would have seen the majors developing all that infrastructure and all that market outlet in ahead, or in concert with developing big resource, we think it’s the role today of the major midstream players to do that. And so it’s not out of the question, but I would just tell you that we have looked at it and looked at it and we think all of the investment required in storage, particularly underground storage, which as you can imagine is a challenge in the northeast, and all of the derivative market for all the product that’s already interconnected into the Gulf Coast is quite a bit to overcome.

And so we certainly aren’t the chemical players that Shell Chemical is and certainly wouldn’t doubt their understanding of that market. But from our standpoint, we’d have to get way into a lot of other derivative markets and so forth to overcome that. And so for us, we think the simplest way is to get some of that product into markets that are expanding and frankly, we look forward to working with Shell to help provide supplies in that and other markets outlet as well and we certainly intend to be connected to that if they go forward with that project.

Brad Olsen – Tudor Pickering

Great. Thank you.

Alan Armstrong

You bet.

Operator

And we’ll go next to Ted Durbin with Goldman Sachs.

Ted Durbin – Goldman Sachs

Thank you. I want to come back to this question on the use of cash at WMB. And if you look at I guess Page 83 of the data books, you’ve got about $2.32 of cash flow, you’re going to generate even before the Canadian operations, paying out $1.75. If I just kind of play back what I’ve heard, it sounds like your preference is to reinvest that excess cash flow into infrastructure rather than them paying it out, at least maybe even say special dividend or whatnot. Maybe you could just walk us through how you’re thinking about that excess cash flow.

Don Chappel

Ted, this is Don. I think we would prefer to reinvest. We think that certainly in terms of a dividend to increase the dividend on the back of accelerated depreciation, we acknowledge that the rate is going to go up in a couple of years is really not that sustainable. Obviously, we expect to have much higher cash flows in a couple of years, but nonetheless, just with the opportunity set that we see in front of us, I think we’ve talked a lot about. And Alan just put a voice to the opportunities we see around the NGL side of the business. We think that that capital is -- can be strategically invested at very attractive rates of return and we think that will really provide greater value for investors long-term.

Ted Durbin – Goldman Sachs

Okay, great. Next question was just on the WPZ and the cash distribution. I mean, we’re forecasting sort of just over one times in 2014. And you made a comment in the press release about getting back to normal levels. I mean how are you seeing where you want normal levels for coverage to be; understanding that we’ve got sort of weaker propane prices and NGL margins and whatnot? But I’m just trying to figure out where we are – think about it as a normalized coverage ratio target?

Don Chappel

I would comment that we would like to see the coverage at or above 1 over an extended period of time. I’ll remind you over 2010-2011, we’re operating at kind of 1.3, 1.4 times coverage. So if you take the two very strong years and then you take 2012 and current guidance on 2013, you still end up way above 1.

So again, I think there will be ups and downs in coverage. As you’ll recall, when we had coverage up in the 1.3, 1.4 range, lot of investors and analysts were suggesting that we should raise the distribution and we said it’s high because margins are high and we want to be in a position that when margins roll back, and they will, because they always do, and then they will go back up, that we’re not under too much stress or strain. So we really look at it on a longer-term basis. So I think, longer term, we would like to be one or better and if we’re better than one, we’re pretty happy about that.

Alan Armstrong

And I would add to that, certainly if we saw this as a business that wasn’t growing and we had that kind of coverage that would be one thing. But we certainly see a transitory in nature and we certainly put a lot of equity into this business in funding a lot of this cash flow that’s very – that’s yet to come on in terms of driving our distribution. And so, I think we feel very good about where we are. And as Don said, we’re really looking to the long-term. But I think to answer your question, we certainly – if we were in a steady state kind of environment, we wouldn’t want to be in the 1 to 1.10 range if we were in a steady state environment.

Ted Durbin – Goldman Sachs

Got it.

Don Chappel

Yeah. And certainly our business mix will be a factor in that. As you know, we’re moving more and more to a fee-based portfolio and as well, Access is entirely fee-based and as the cash distribution’s back to Williams grow off Access, that will further shift us toward fee. And then it’s a question of what kind of margins we enjoy and if we’re in a low margin cycle, the coverage will be tighter. And if we’re in a high margin cycle it will be more robust. But I think the business mix – and you have to think about Access as a contributor to that as well.

Ted Durbin – Goldman Sachs

Great. And then last one, just small one for me, you talked about the attractive economics of running propane versus ethane. Just how much can you run through Geismar? Sort of an ethane/propane mix, if we think about that.

Alan Armstrong

Yeah, we can run about 30% on an inlet volume basis in propane.

Ted Durbin – Goldman Sachs

Okay. That’s it for me. Thanks, guys.

Operator

We’ll go next to Carl Kirst with BMO Capital Markets.

Carl Kirst – BMO Capital Markets

Thanks. Good morning, everybody. Appreciate all the color and the time. At this point, I just have a few clarifying questions, if I could, and maybe the first is just on Ohio Valley and the 150 million a day that was referenced of delay. I didn’t catch – is that something that will sort of see kind of a consistent delay through 2013 and 2014, or by 2014, for instance, should the challenges of getting the right equipment in place be surpassed where we don’t have any of those curtailments and that $80 million to $120 million of EBITDA, Alan, I believe you referenced won’t be dragging any more, could I just get a little bit more clarification on that?

Frank Billings

Sure. This is Frank again. That 100 – that volume that I referenced, that’s volume that we know is available to us today. It’s actually produced volume that’s just behind our system. And we feel we’re going to get the majority of those operational issues resolved in the second quarter.

So we’re hoping that we have that volume flowing freely to our Fort Bela facility and to our fractionation assets in 2013. So really it’s – it’s really on us to make certain that we get through the operating and asset issues that we’ve been dealing with over the last few months and we get the assets stabilized. And when we do that, we’ll have a nice base of business for 2013 and we will be able to grow forward from there, per the guidance.

Carl Kirst – BMO Capital Markets

Great. So we actually have that, or in the guidance, the volume is actually coming back call it by midyear, then?

Frank Billings

Midyear to the end of the year.

Carl Kirst – BMO Capital Markets

Okay.

Alan Armstrong

I think the challenge is, all the time we’re doing that, of course, there’s new volume being drilled. And so we constantly will be in a catch-up mode for some time. I think it’s important to note though, if you look at Laurel Mountain, we’ve been at that for a while now. We are now ahead of Chevron, finally out there in terms of capacity. We’re getting close to being there. While I would say we’re going to be on the treadmill for a long time in the northeast with Cabot and some of the other producers there. I would say we’re pretty well at pace with those producers right now.

And we’ve just – things have moved faster in OV, and particularly again from a liquids production standpoint both in terms of richer gas and higher degrees of condensate. So I think we’re very confident in our ability to catch up, but I would just say given the productivity of those reserves, we’re going to be on a treadmill there for a long, long time to come and likely will be having some lagging excess capacity or excess production held behind our infrastructure for quite a while.

Carl Kirst – BMO Capital Markets

And Alan, if I could, just as a follow-up on that, I guess the producer frustration, is all of this in effect, call it industry, rich gas related? Has there been any execution type of issues where Williams has stubbed its toe? I just want to make sure there’s no risk of, you know, brand franchise bruising, for instance?

Alan Armstrong

Yeah, I’ll let Frank take that. And I’ll just tell, you we’re not the only ones struggling up there. I think about anybody, if they were honest with you, would tell you what’s going on up there is a lot of this, and as well, the producers are having their own issues upstream of our facilities as well. Frank, I don’t know if you want to add some color to that.

Frank Billings

Sure. I would say the issues that we’ve had have been mostly around our field receipt points. And obviously those are vital in getting the production into our gathering systems and ultimately into our processing assets.

We’ve not completed those installations as timely as we would have liked. And then we have experienced inconsistent operations and reliability as production has come back up to those facilities. Again, for 2013, I think our key operating issue for us is going to be to optimize and stabilize the current assets that we have in place and have the facility’s better matched to the gas quality of the production.

No one really knows with certainty the composition until it’s actually produced. And I think we’ve experienced some mismatched facilities to the production and what we’re seeing out there. So, the reserves are there. Obviously, I think the producers would be producing more, but we have to reliably handle the production and move the production for these producers.

Carl Kirst – BMO Capital Markets

Understood. Thank you. And maybe just last question, Don, just a clarification on the cash tax guidance and understanding what’s happened has been a benefit both of ACMP, as well as legislation on bonus depreciation.

Is it possible to attribute that in any way, 90% to ACMP, 10% to legislation? I mean if we were trying to basically ascribe a benefit, if you will, even prior to legislation, from the purchase price, for instance, of ACMP, this is real value you guys are getting. Is there any way to do that?

Don Chappel

I would say both are significant. I couldn’t give you the number, the exact number offhand, but if you’re interested in trying to learn more about that, I encourage you to call John and Sharna, and they can...

Carl Kirst – BMO Capital Markets

Sure.

Don Chappel

Try to help you estimate the number, but they are both pretty significant.

Carl Kirst – BMO Capital Markets

Great. Thanks, guys.

Alan Armstrong

Thank you.

Operator

And we’ll go next to Craig Shere with Tuohy Brothers.

Craig Shere – Tuohy Brothers

Good morning, guys. Thanks for the long call here.

Alan Armstrong

Good morning.

Craig Shere – Tuohy Brothers

I got a couple questions. If we could kind of dig a little deeper into the petchem services at the MB level, I got the distinction of being kind of a growth opportunity that if you had seven times investments EBITDA, maybe having 100 million of EBITDA in a couple years and can be dropped down in some of the states, can you discuss kind of the long-term vision of that and at what point in parts or in whole a drop-down might make sense?

Alan Armstrong

Certainly, that would make a lot of sense. I don’t think there would be really any prohibition to the majority investment that we are making there from being qualified income. And certainly, we feel like WPZ is pretty full on capital opportunity right now. And so, WPZ is well positioned to do a lot of that development.

And certainly it centers around the kind of things we’ve talked about in the past, tremendous amount of liquids coming into the area and a lot of changes going on in the petchem space there where parties are trying to crack lighter products and that changes a lot of thing. It changes butane movements, changes propylene movements, a lot of things that change as a result of the feed stock coming into those plants changing, and we have been thinking for some time there will be quite a shift in logistics requirements for the business and that you can’t build all this new cracking capacity in the Gulf Coast and not have a lot of new logistics issues. And so we’ve been working to get ahead of that.

Both in terms of getting our supplies and our producers’ supplies access to better markets, but as well helping serve the petchem market in an open access manner, which heretofore has been pretty much not the way business has been done in the Gulf Coast in terms of having open access pipelines for all these products in between the facilities.

And so we think there’s been a huge opportunity left to us there to be that open access provider for services. And so we continue to see a lot of opportunities. We picked up pipelines from BP that were underutilized. We picked up pipelines from Exxon that were underutilized and we picked up a pipeline from Explorer that were underutilized and we have quite a bit of similar activity going on to continue to have distribution networks that move within expanding market there.

Craig Shere – Tuohy Brothers

Alan, do I understand what you’re saying is there’s not just the obvious opportunities for the organic CapEx that you already laid out on your required pipes, but that there’s incremental M&A opportunities in that segment?

Alan Armstrong

I would say it’s pretty – they are pretty modest relative to what we normally, what you would normally hear from us in terms of M&A and so those acquisitions that we’ve made over the last couple of years in total are I think $400 million or somewhere in that ballpark and so, so I would say – combined and so I would say it’s those kind of pickups that will continue to assemble smaller investments like that and piece them together into a smart network.

Craig Shere – Tuohy Brothers

Understood. A couple other quick follow-ups. Notice the CapEx costs on the Canadian off gas ethane project were up from 3Q guidance. Is this just incremental accretive CapEx on an expanding off take? Or is it simply inflation?

Randy Newcomer

This is Randy Newcomer. Canadian ethane project, recovery project at Red Water is currently in construction and slated to be completed in May of this year and so what that represents is, is – additional better cost estimation basically for completion of the projects. So it’s inflation in the cost of the project.

Craig Shere – Tuohy Brothers

Okay, and last question for me, I noticed that the ethylene price cap had some changes. We went up a little in 2013, which is benefiting Geismar margins there, but then we kind of flat lined in the 2014 versus what was previously assumed to be a steep contango in to the following year. Can you discuss kind of what’s driving the long-term expectations there?

Alan Armstrong

Sure. You know, we continue to really follow CMAI’s forecast there. And so you’ll see that’s right in line with CMAI’s forecast and that earlier, I think $0.62 that we had in there is also right in line with CMAI. So, you know, lot of moving parts in that space and we think those guys did a pretty good job of providing that guidance. And so we take a look and certainly are influenced heavily by their perspective and that’s actually what drove that.

Craig Shere – Tuohy Brothers

I got you. So the – it can easily jump around quarter-to-quarter in terms of long-term guidance. It’s not something you’re trying to neutralize by flat lining it?

Alan Armstrong

That’s correct.

Craig Shere – Tuohy Brothers

Okay, great. Thank you.

Alan Armstrong

And I would say certainly this year right now that forecast is conservative relative to what we’re seeing on the ethylene and certainly conservative – our forecast is conservative compared to what we’re seeing right now on propylene, but certainly there will be some volumes continuing, with new ethylene production coming on as some of these new facilities get back online. So, I don’t think it’s going to be real big frankly in 2013 and maybe not even in 2014, but beyond that, we’ll probably start to see ethylene production pick up.

Craig Shere – Tuohy Brothers

Understood. Thank you.

Operator

And we’ll take our next question from Sharon Lui with Wells Fargo.

Sharon Lui – Wells Fargo

Hi, good morning.

Alan Armstrong

Good morning, Sharon.

Sharon Lui – Wells Fargo

Looking at I guess your guidance for the Geismar volumes, is the difference really just related to the timing of the expansion?

Randy Newcomer

Are you referring to – this is Randy Newcomer, are you referring to the volume estimates of 25 million?

Sharon Lui – Wells Fargo

Yeah.

Randy Newcomer

Basically its several different factors, but the primary factors are related to the timing of the turnaround where we’re running longer, moving the turnaround from the spring to the fall, between turnaround cycles. And at the tail end of the turnaround, you end up having a little bit of natural degradation in your production capacity over the course of the run. So, that’s impacting it a little bit.

The second thing is, as we’re planning this turnaround, obviously it’s a combination of both maintenance activities and tie-ins related to the expansion. And so as you might expect, there’s a lot of complexity to that and the need for a lot of good planning effort.

We’re not quite finished with the final plan for the activity during that timeframe, but we injected a little bit of additional -- and Alan spoke to it before, a little more of conservatism into the volume forecast, understanding that there will probably be a few bobbles as we come up from the expansion. We’re going to kind of come up after the turnaround in full expansion mode, whereas before we were going to come up at the current rate and then bring expansion on later in the year. With moving the timing of the turnaround to the fall, we will be coming up off the turnaround in full expansion mode. So a combination of factors there.

Additionally, when you are crack-heavy with propane versus ethylene, you make a little bit less ethylene and more propylene. And so, we really have to look at the total olefins production rather than just ethylene, and 125 million pounds per year is related just to ethylene. If you net it with the other olefins that you produce, that certainly are valuable as well, like propylene, it’s about 100 million pounds a year.

Sharon Lui – Wells Fargo

Okay, and do you anticipate I guess cracking propane at that 30% max or close to it this year?

Randy Newcomer

It just depends on the relatively size of at point in time, we tune that up each month.

Alan Armstrong

Yeah. So basically if you took our assumptions on the ethane to ethylene spread, any time we’re cracking propane to propylene it’s an upgrade to those economics. That’s the only reason we would be doing that, is that if we see better economics and obviously right now we’re seeing better economics fracing the propane. So that’s always kind of an upside to the basic ethane to ethylene spread.

Sharon Lui – Wells Fargo

Okay, okay. And then maybe if you could talk about Williams’ competitive position in bidding for the new pipeline project in Florida.

Frank Ferazzi

This is Frank Ferazzi. We, like much of the rest of the market, have received the documents for FP&L’s RFP. And so it’s a complicated set. It’s a complicated RFP. It’s 200 pages or more. And so we’re in the process of evaluating both the commercial aspects of the RFP, as well as our financial planning people looking at the route and coming up with an estimate of capital. And so we have a lot of work to do between now and early April in response to the RFP are due.

And have not yet decided whether we’re going to bid or not. I would say that I think Gulf Stream is in a good position currently in the marketplace, strong assets, strong relationships with the market. So I think that will give us an advantage in the end.

Sharon Lui – Wells Fargo

Okay. And I guess if you do decide to bid, would this be a project you are pursuing with Spectra like a JV – 50/50 JV?

Frank Ferazzi

It would be a project, a bid that would come from Gulf Stream.

Sharon Lui – Wells Fargo

From Gulf Stream.

Frank Ferazzi

Which, of course, is owned by Williams & Spectra jointly.

Sharon Lui – Wells Fargo

Okay, great. Thank you.

Operator

We’ll take our next question from TJ Schultz with RBC Capital Markets.

TJ Schultz – RBC Capital Markets

Hey, guys. Just following up on the NGL projects in the Marcellus and Utica, I guess as the liquid takeaway options evolve and options for ethane takeaway come along, what is the status or interest level of your proposed confluence rich gas project there?

Alan Armstrong

Well, I would say confluences has merged into a lot of different things but we are in really good share there, I would say and have made good progress on contracting with parties in the area, it will look a little bit different than what we originally laid out, but in terms of investment opportunity, it will look very much the same. And so we’re excited about that and, you know, it’s helping – as well, it’s helping to support our confidence in a large raw make system being built for the Gulf Coast as well. And so things are coming together there very nicely.

TJ Schultz – RBC Capital Markets

Okay, thanks. Everything else I had was answered. Appreciate it.

Alan Armstrong

Okay, thank you.

Operator

We’ll go next to Becca Followill with U.S. Capital Advisors.

Becca Followill – U.S. Capital Advisors

Morning, guys.

Alan Armstrong

Good morning.

Becca Followill – U.S. Capital Advisors

Back to the question on the use of cash at WMB, the coverage ratio at PZ was 0.95 and 12 and we’ve talked about where it is for 2013 and 2014, it’s one times with some nice increases in ethylene and propane. I guess I’m looking for more on at what point does in the support PZ, given that they need to do equity and forego some RDRs with some of that use of cash, given that it’s a fairly weak outlook for the next couple of years?

Don Chappel

Becca, this is Don. I would say it’s a fairly hypothetical question right now. I mean I appreciate the question but I would say it would depend on the facts and circumstances developed. I would say, again, the plan that we laid out, we execute on the plan. We don’t believe there’s a need for support. We’ll see how things play out and if the situation were to be more difficult, that’d be something we would have to consider. But I think it’s hard to be formulaic about it.

Again, we look at – and in terms of coverage, we looked at 2010, 2011, 2012, 2013, 2014, so if you really look at kind of the five-year average – again, the five year is well above 1. Yes, we expect 2013 to be below 1, but again we’re also investing a tremendous amount of capital in fee-based growth projects that we expect to come in the service in 2014 and 2015 and really boost the fee-based cash flows and boost the coverage at the same time that we’re raising distributions.

And 2013 is burdened by the carrying costs of those projects, both in terms of equity and debt that have been issued to fund that growth. So, it’s not just about commodity price, but it’s about the tremendous growth that’s occurring in the carrying cost of that. So again, we think this is still just a near-term challenge and, again, with the business plan that we’ve laid out and assuming effective execution, we think we’ll be through this in relatively short order.

Becca Followill – U.S. Capital Advisors

Thank you, guys. That’s all I had.

Alan Armstrong

Thanks, Becca.

Operator

And we’ll take our next question from Selman Akyol with Stifel.

Selman Akyol – Stifel

Thank you. Good morning.

Alan Armstrong

Good morning.

Selman Akyol – Stifel

Appreciate all the detail. Just going back to Geismar for a minute or two. First of all, can you just remind us of the contract structure, or are you selling all into the spot market?

Randy Newcomer

Well, this is Randy Newcomer. We have a number of contracts and our contract mix, as Alan alluded to earlier, is changing. A lot of our ethane plus kind of contracts and colored ethylene sales have rolled off and in fact as of now, we really only have one that is on sale on an ethane-plus basis. The rest of them are all contracts that are priced at market basically. Some of them are spot. Some of them are yearly contracts, but the pricing is based on more spot kind of pricing. And we purposely have done that because we believe in the fundamentals of that ethylene is going to continue to be in good demand and we’ll have a great ethylene crack going forward. So we’ve positioned ourselves to be exposed to the full crack for the present and including our expanded volumes as they come on later in the year.

Selman Akyol – Stifel

Okay. And then given your ability to, I guess, to crack propane and propylene, given margins have been extremely robust for propylene this first quarter, we could expect high margins then going into Q1?

Randy Newcomer

Yes, we do.

Selman Akyol – Stifel

Okay. And then if you look out into 2014, looks like your capacity utilization assumptions are pretty high then going into that as well and you are seeing that I guess reflected by your customers, too?

Alan Armstrong

You are talking about on the volumes?

Selman Akyol – Stifel

Yeah.

Alan Armstrong

At Geismar?

Selman Akyol – Stifel

Yes.

Alan Armstrong

Well, that’s obviously a full year of the expansion coming up and that’s really what’s driving that. Even in the fourth quarter of this year, because of what we said we’ve built in some conservatism we normally – you would normally see us putting in and depending on how many – how much downtime we expect for the year. But normally you would see us running around 98% to 99% uptime on the facility like that, and I think we’ve got somewhere in the 92% range built in just following the startup there in the fourth quarter. Again, just trying to be conservative relative to the kind of bobbles we might experience as we bring that new facility up. So it’s a combination of those two things that is driving, but obviously the big driver is the new expansion that will be online full year in 2014.

Selman Akyol – Stifel

Great, and then just going back to your guidance, you have about $2 billion forecasted for distributions in 2013. Can you say how many units that’s based on?

Alan Armstrong

Asking how many units.

Don Chappel

That’s a good question. We haven’t disclosed the number of units but it would be obviously the current units outstanding and some plan for or some assumption on new units and we’re not prepared to provide guidance on that at this point.

Selman Akyol – Stifel

All right, and one very small last question for me. The Mid-Atlantic Connector, when do you have that coming online in 2013?

Randy Newcomer

Just one second. Mid-Atlantic Connector actually went in service last week.

Selman Akyol – Stifel

Okay.

Randy Newcomer

So it was originally scheduled to be in service in November, but we had a two-month delay.

Selman Akyol – Stifel

Thank you very much.

Alan Armstrong

Thanks.

Operator

And there are no other questions at this time. I would like to turn the conference back to our speakers for any closing remarks.

Alan Armstrong

Okay, great. Well, thank you very much on behalf of myself, our executive leadership team and our Investor Relations staff, I want to thank you for your time and attention this morning. A lot of moving parts that you all are all right on top of and appreciate the opportunity to give you better explanation around that. We certainly look forward to sharing a more detailed deep dive into all of our businesses, with all of you at our upcoming Analyst Day that is scheduled for May 21st. And we look forward to seeing you then.

Operator

Thank you, everyone. That does conclude today’s conference. We thank you for your participation.

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