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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Form 10-K

Commission file number 1-16335

Williams Energy Partners L.P.

Registrant’s telephone number, including area code:

Securities registered pursuant to Section 12(b) of the Act:

Securities registered Pursuant to Section 12(g) of the Act:

      Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes þ          No o

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). þ

      The aggregate market value of the registrant’s voting and non-voting common units held by non-affiliates computed by reference to the price at which the units last sold as of June 28, 2002, was $420.7 million.

      As of February 28, 2003, there were outstanding 13,679,694 common units, 7,830,924 Class B common units and 5,679,694 subordinated units.

DOCUMENTS INCORPORATED BY REFERENCE

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WILLIAMS ENERGY PARTNERS L.P.

FORM 10-K

PART I

(a)     General Development of Business

      We were formed as a limited partnership under the laws of the State of Delaware in August 2000. The principal executive offices of WEG GP LLC, our General Partner, are located at One Williams Center, Tulsa, Oklahoma 74172 (telephone (877) 934-6571).

      On April 11, 2002, we acquired all of the membership interests of Williams Pipe Line Company, LLC (“Williams Pipe Line”) from a wholly owned subsidiary of The Williams Companies, Inc. (“Williams”) for approximately $1.0 billion. Williams Pipe Line owns and operates the Williams Pipe Line system. Because Williams Pipe Line was an affiliate of ours at the time of the acquisition, the transaction was between entities under common control and, as such, was accounted for similarly to a pooling of interests. Accordingly, we have restated our historical financial statements to combine our results with those of Williams Pipe Line. We financed the acquisition through a $700.0 million short-term loan and the issuance of 7,830,924 Class B common units (“Class B units”) to Williams. As a result, Williams and its subsidiaries’ ownership interest in us increased from approximately 60% to approximately 77%, including its general partner interest.

      On May 23, 2002, we completed a public offering of 8,000,000 common units from which we received net proceeds of approximately $289.0 million after considering Williams’ contribution to maintain its 2% general partner interest and payment of offering fees. As a result, Williams’ ownership interest in us decreased to approximately 55%, which includes its 53% limited partnership interest and 2% general partner interest.

      On November 15, 2002 we issued and sold $420 million of senior secured notes in a private placement, which was used to repay the short-term loan incurred at the time we acquired Williams Pipe Line and related fees. We issued an additional $60 million of senior secured notes on December 6, 2002, which was used primarily for repayment of our other debt.

      In November 2002, Williams created a new general partner, WEG GP LLC (“General Partner”). The new general partner, which is owned by affiliates of Williams, has all of the rights, privileges and responsibilities relative to us previously held by the former general partner, Williams GP LLC. Williams GP LLC will continue to own the Class B units issued to it by us in April 2002.

      On February 20, 2003, Williams announced its intention to divest its interest in our General Partner and all of its limited partnership interests. It is uncertain what form this potential transaction may take and management cannot currently assess what impact such an acquisition would have on the on-going operations of the Partnership.

(b)     Financial Information About Segments

      See Part II, Item 8 — Financial Statements and Supplementary Data.

(c)     Narrative Description of Business

      We are principally engaged in the storage, transportation and distribution of refined petroleum products and ammonia. Our asset portfolio currently consists of:

	•	the Williams Pipe Line system, a 6,700-mile refined petroleum products pipeline system, including 39 petroleum products terminals, serving the mid-continent region of the United States;
	•	five petroleum products terminal facilities located along the Gulf Coast and near the New York harbor. We refer to these facilities as our marine terminals;

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	•	23 petroleum products terminals (some of which are partially owned) located principally in the southeastern United States. We refer to these terminals as our inland terminals; and
	•	an ammonia pipeline system, which extends approximately 1,100 miles from Texas and Oklahoma to Minnesota.

      Upon the closing of our initial public offering in February 2001, four marine terminals, 24 inland terminals and the ammonia pipeline system were transferred to us, including related liabilities. We acquired an additional marine terminal and two inland terminals and sold one inland terminal during 2001. In 2002, we acquired the Williams Pipe Line system and sold two inland terminals.

Refined Petroleum Products Transportation and Distribution

      The United States refined petroleum products transportation and distribution system links oil refineries to end-users of gasoline and other refined petroleum products and is comprised of a network of pipelines, terminals, storage facilities, tankers, barges, rail cars and trucks. For transportation of refined petroleum products, pipelines are generally the lowest-cost alternative for intermediate and long-haul movements between different markets. Throughout the distribution system, terminals play a key role in moving products to the end-user market by providing storage, distribution, blending and other ancillary services. Products transported, stored and distributed through the Williams Pipe Line system and marine and inland terminals include:

	•	refined petroleum products, which are the output from refineries and are often used as fuels by consumers. Refined petroleum products include gasoline, diesel, jet fuel, kerosene and heating oil;
	•	liquefied petroleum gases, or LPGs, which are produced as by-products of the crude oil refining process and in connection with natural gas production. LPGs include butane and propane;
	•	blendstocks, which are blended with petroleum products to change or enhance their characteristics such as increasing a gasoline’s octane or oxygen content. Blendstocks include alkylates and oxygenates;
	•	heavy oils and feedstocks, which are often used as burner fuels or feedstocks for further processing by refineries and petrochemical facilities. Heavy oils and feedstocks include #6 fuel oil and vacuum gas oil; and
	•	crude oil and condensate, which are used as feedstocks by refineries.

WILLIAMS PIPE LINE SYSTEM

      The Williams Pipe Line system covers an 11-state area extending from Oklahoma through the Midwest to North Dakota, Minnesota and Illinois. The system transports refined petroleum products and LPGs and includes a common carrier pipeline and 39 terminals that provide transportation and terminals services. The products transported on the Williams Pipe Line system are largely transportation fuels, and in 2002 were comprised of 59% gasoline, 31% distillates (which includes diesel fuels and heating oil) and 10% LPGs and aviation fuel. Product originates on the system from direct connections to refineries and interconnections with other interstate pipelines for transportation and ultimate distribution to retail gasoline stations, truck stops, railroads, airlines and other end-users. Please read Note 15 to the Consolidated Financial Statements.

      The Williams Pipe Line system largely depends on the demand for refined petroleum products and LPGs in the markets it serves and the ability of refiners and marketers to meet those needs through the pipeline system. According to statistics provided by the Energy Information Administration, the demand for refined petroleum products in the market area served by Williams Pipe Line system, known as Petroleum Administration for Defense District II, or PADD II, is expected to grow at an average rate of approximately 1.9% per year over the next 10 years. The total production of refined petroleum products from refineries located in PADD II is currently insufficient to meet the demand for refined petroleum products in PADD II. The excess PADD II demand has been and is expected to be met largely by imports of refined petroleum products via pipelines from Gulf Coast refineries that are located in PADD III.

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      The Williams Pipe Line system is well-connected to the Gulf Coast refineries through interconnections with the Explorer, Shell, and CITGO pipelines. These connections to Gulf Coast refineries, together with the Williams Pipe Line system’s extensive network throughout PADD II and connections to PADD II refineries, should allow it to accommodate not only demand growth, but also major supply shifts that may occur.

      The Williams Pipe Line system has experienced increased shipments over the last three years, with total shipments increasing by 2.4% from 2000 to 2002. The volume increases have come partly as a result of development projects on the system and from incentive agreements with shippers utilizing the system. In 2002, demand growth for refined petroleum products in the markets served by the system was slowed largely by generally less favorable economic conditions in those markets. The operating statistics below reflect the Williams Pipe Line system’s operations for the periods indicated:

      The maximum number of barrels that the system can transport per day depends upon the operating balance achieved at a given time between various segments on the system. This balance is dependent upon the mix of petroleum products to be shipped and the demand levels at the various delivery points. We believe that we will be able to accommodate anticipated demand increases in the markets we serve through expansions or modifications of the Williams Pipe Line system, if necessary.

      The Williams Pipe Line system is the fifth largest common carrier pipeline of refined petroleum products and LPGs in the United States based on barrel miles shipped. Through direct refinery connections, and interconnections with other interstate pipelines, the system can access approximately 44% of the refinery capacity in the continental United States. In general, the system does not take title to the petroleum products it transports.

      The Williams Pipe Line system generates approximately 80% of its revenue, excluding product sales revenue, through transportation tariffs for the volumes it ships. These tariffs vary depending upon where the product originates, where ultimate delivery occurs and any applicable discounts. All interstate transportation rates and discounts are in published tariffs filed with the FERC. Such tariffs also include charges for terminals and storage of products at the Williams Pipe Line system’s 39 terminals. Currently, the tariffs we charge to shippers for transportation of products generally do not vary according to the type of products transported. Published tariffs serve as contracts and shippers nominate the volume to be shipped on a monthly basis. In addition, we enter into supplemental agreements with shippers that commonly result in volume commitments by shippers in exchange for capital expansion commitments. These agreements have terms ranging from one to ten years. Nearly 60% of the shipments in 2002 were subject to these supplemental agreements. While many of these agreements do not represent guaranteed volumes, they do reflect a significant level of shipper commitment to the Williams Pipe Line system.

      The system generates the remaining 20% of its revenues, excluding product sales revenues, from leasing pipeline and storage tank capacity to shippers on a long-term basis and from providing product and other

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      Product sales revenues are generated as a result of selling products generated in the butane blending, transmix fractionation and over and short activities. While the revenues generated from these activities were over $69.0 million in 2002, the resulting margin was only $5.4 million, which illustrates that these activities comprise a small portion of Williams Pipe Line’s total net operating margin.

      Blending activities involve the generation of small volumes of gasoline by blending natural gas liquids with gasoline already in the Williams Pipe Line system to produce grades of gasoline that satisfy quality and regulatory requirements for specific markets. We and an affiliate of Williams agreed that we will perform these blending services for ten years at an annual fee that will increase to approximately $3.6 million for 2003. As a result of this change, we no longer purchase and sell products related to blending activities. In addition, we will perform blending services at our Little Rock, Arkansas inland terminals, which will generate annual blending fees of approximately $0.6 million. Consequently, our total blending services revenues for 2003 will be approximately $4.2 million. Please read “Customers and Contracts” below and “Management Discussion and Analysis — Overview — The Williams Pipe Line System” for additional discussion of our blending services.

      Fractionation activities involve processing transmix, a mixture of products resulting from the intermingling of different product grades during normal operation of a pipeline. Some of the transmix processed comes from the Williams Pipe Line system and some is purchased from other parties that do not have their own fractionation facilities. The transmix is separated at our fractionator in Des Moines, Iowa, and the recovered gasoline and fuel oil are sold to third parties.

      Over and short activities involve our managing imbalances that occur during normal operation of the system. Generally, the physical volumes on our system will not match the volumes recorded by our customers. These differences are either product quality differences or absolute volume differences. Quality differences result from the commingling of product on the pipeline during times when we change the product type shipped on our pipeline. When these differences occur, we purchase and sell products at prevailing market prices to manage the imbalance.

      The Williams Pipe Line system consists of a 6,700-mile pipeline. The pipeline system includes 25.6 million barrels of aggregate storage capacity at 38 terminals and at various pump stations. The terminals deliver refined petroleum products primarily into tank trucks, although two terminals can load into tank rail cars.

      The following table contains information regarding the Williams Pipe Line system’s terminal facilities:

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      In addition, we have access agreements with both El Paso Corporation and ConocoPhillips Corporation, providing us the right to use their terminal facilities at Wichita, Kansas.

      Refined petroleum products originate from both refining and pipeline interconnection points along the Williams Pipe Line system. In 2002, 60% of the refined petroleum products transported on the Williams Pipe Line system originated from direct refinery connections and 40% originated from interconnections with other pipelines. As set forth in the table below, the system is directly connected to, and receives product from, ten operating refineries.

Major Origins — Refineries (Listed Alphabetically)

      The Williams Pipe Line system receives product from 12 other pipeline systems. The most significant of these pipeline connections is to Explorer Pipeline in Glenpool, Oklahoma, which transports product from the large refining complexes located on the Texas and Louisiana Gulf Coast. Product from Explorer can be transferred into the Williams Pipe Line system for delivery into the mid-continent and northern-tier states. Another significant connection is to the Phillips Pipeline at Kansas City, Kansas, which transports product from the ConocoPhillips refinery in Borger, Texas and the U.S. Gulf Coast via the Seaway Products Pipeline. The Williams Pipe Line system is also connected to all Chicago area refineries through the West Shore Pipe Line.

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Major Origins — Pipeline Connections (Listed Alphabetically)

      We ship refined petroleum products for several different types of customers, including independent and integrated oil companies, wholesalers, retailers, railroads, airlines and regional farm cooperatives. End markets for these deliveries are primarily retail gasoline stations, truck stops, farm cooperatives, railroad fueling depots and military and commercial jet fuel users. Propane shippers include wholesalers and retailers who, in turn, sell to commercial, industrial, agricultural and residential heating customers, as well as utilities who use propane as a fuel source.

      For the year ended December 31, 2002, the pipeline system had approximately 50 customers. The principal shippers included six independent refining companies, three integrated oil companies and one large farm cooperative. Transportation revenues attributable to these top 10 shippers for the year ended December 31, 2002 were $155.8 million, representing 45% of the Williams Pipe Line system’s total revenues, and 57% of revenues excluding product sales revenues.

      In 2002, affiliates of Williams accounted for $42.0 million or approximately 12% of the Williams Pipe Line system’s total revenues. Of these affiliate revenues, approximately 60% were generated from products sales related to blending, fractionation and over and short settlement activities. As described above under “Operations,” we have agreed to perform blending services on behalf of an affiliate of Williams for an annual fee that will increase to approximately $3.6 million in 2003. As a result, we no longer purchase and sell products related to blending activities. In addition, we will perform blending services at our Little Rock, Arkansas inland terminals which will generate additional annual blending fees of approximately $0.6 million. Consequently, our total blending services revenues for 2003 will be approximately $4.2 million.

      In certain markets, barges provide an alternative source for transporting refined products; however, pipelines are generally the lowest-cost alternative for refined petroleum product movements between different markets. As a result, the Williams Pipe Line system’s most significant competitors are other pipelines that serve the same markets. Three key pipeline competitors include the Kaneb pipeline systems in the western and

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      Kaneb’s East Pipeline, which runs from southern Kansas to North Dakota, operates approximately 100 miles west of and parallel to the Williams Pipe Line system. Kaneb’s East Pipeline receives product from both Gulf Coast and mid-continent refiners through connections to pipelines such as the Conoco pipeline and through direct refinery connections, including a direct connection to the Frontier refinery in El Dorado, Kansas, to which the Williams Pipe Line system is also connected. In December 2002, Kaneb purchased a pipeline from Tesoro which receives product from Tesoro’s refinery in Mandan, North Dakota and runs to the Minneapolis/ St. Paul, Minnesota area.

      The portion of the BP pipeline system with which the Williams Pipe Line system competes is a non-common carrier pipeline system that is supplied by BP’s refinery in Whiting, Indiana. This system extends south to Kansas City, Missouri and west through Iowa and Minnesota. If BP were to convert its pipeline system to a common carrier system, it could result in additional competition. The Conoco pipeline system and its joint venture, Heartland Pipeline Company, are common carrier systems that run through Oklahoma, north into Iowa and east through Missouri to Wood River, Illinois. Conoco’s pipeline receives its product supply from mid-continent and Gulf Coast refiners, some of which also supply the Williams Pipe Line system.

      Competition with each of these pipeline systems is based primarily on transportation charges, quality of customer service, proximity to end-users and longstanding customer relationships. However, given the different supply sources on each pipeline, pricing at either the origin or terminal point on a pipeline may outweigh transportation costs when customers choose which line to use.

      Shippers on the Williams Pipe Line system can reduce their transportation costs by entering into exchange agreements with other shippers. Under these arrangements, a shipper will agree to supply a market near its refinery in exchange for receiving supply from another refinery in a more distant market. These agreements allow the two parties to reduce the average transportation rate paid to us. We have been able to compete with these alternatives through price incentives and through long-term commercial arrangements with potential exchange partners. Nevertheless, a significant amount of exchange activity has occurred historically and is likely to continue.

PETROLEUM PRODUCTS TERMINALS

      Within our terminal network, we operate two types of petroleum products terminals: marine terminals and inland terminals. Our marine terminal facilities are located in close proximity to refineries and are large storage and distribution facilities that handle refined petroleum products, blendstocks, heavy oils and feedstocks and crude oil and condensate. Our inland terminals are located in the southeastern United States and are primarily located along third party pipelines such as Colonial, TEPPCO and Plantation. These facilities receive products from pipelines and distribute them to third parties at the terminals, which in turn deliver them to end-users such as retail outlets. Because these terminals are unregulated, the marketplace determines the prices we can charge for our services.

      In 2002, Williams Energy Marketing & Trading Company and Williams Refining & Marketing, L.L.C., subsidiaries of Williams, utilized our facilities to support their business activities and were among our largest terminal customers, representing approximately 15% and 5%, respectively, of revenues at our petroleum products terminals. In 2002, Williams began to significantly reduce their level of marketing and trading activity. As a result, we expect that Williams will comprise a significantly smaller portion of our ongoing revenues as we replace their revenue with revenues from third-party customers. Please read Note 15 to the Consolidated Financial Statements. For additional information relating to our commercial agreements with Williams and its affiliates, please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Related Party Transactions”.

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Marine Terminal Facilities

      The Gulf Coast region is a major hub for petroleum refining, representing approximately 43% of total U.S. daily refining capacity and 74% of U.S. refining capacity expansion from 1990 to 2001. The growth in Gulf Coast refining capacity has resulted in part from consolidation in the petroleum industry to take advantage of economies of scale from operating larger, concentrated refineries. We expect this trend to continue in order to meet growing domestic and international demand. From 1990 to 2001, the amount of petroleum products exported from the Gulf Coast region increased by approximately 20%, or 220 million barrels. The growth in refining capacity and increased product flow attributable to the Gulf Coast region has created a need for additional transportation, storage and distribution facilities. In the future, the competition resulting from the consolidation trend, combined with continued environmental pressures, continuation of imports, governmental regulations and market conditions, could result in the closing of smaller, less economical inland refiners, creating even greater demand for petroleum products refined in the Gulf Coast region.

      We own and operate five marine terminal facilities, including four marine terminal facilities located along the Gulf Coast and one terminal facility located in Connecticut near the New York harbor. Our marine terminals are large storage and distribution facilities that provide inventory management, storage and distribution services for refiners and other large end users of petroleum products. Our marine terminal facilities have an aggregate storage capacity of approximately 17.6 million barrels.

      Our marine terminal facilities primarily receive petroleum products by ship and barge, short-haul pipeline connections to neighboring refineries and common carrier pipelines. We distribute petroleum products from our marine terminals by all of those means as well as by truck and rail. Once the product has reached our terminal facilities, we store the product for a period of time ranging from a few days to several months. Products that we store in our marine terminal facilities include petroleum products, blendstocks and heavy oils and feedstocks.

      In addition to providing storage and distribution services, our marine terminal facilities provide ancillary services including heating, blending and mixing of stored products and injection services. Many heavy oils require heating to keep them in a liquid state. Further, in order to meet government specifications, products often must be combined with other products through the blending and mixing process. Blending is the combination of products from different storage tanks. Once the products are blended together, the mixing process circulates the blended product through mixing lines and nozzles to further combine the products. Finally, injection is the process of injecting refined petroleum products with additives and dyes to comply with governmental regulations and to meet our customers’ marketing initiatives.

      Our terminals generate fees primarily through providing long-term or spot demand storage services and inventory management for a variety of customers. Refiners and chemical companies will typically use our facilities because their facilities are inadequate, either because of size constraints or the specialized handling requirements of the stored product. We also provide storage services and inventory management to various industrial end users, marketers and traders that require access to large storage capacity.

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      The following table outlines our marine terminal locations, capacities, primary products handled and the connections to and from these terminals: