US-based Williams grows gas storage, transmission footprint in Texas with NorTex deal

US midstream operator Williams has closed a $423 million deal to purchase NorTex Midstream, an operator of natural gas pipeline and storage assets in North Texas, from an affiliate of Tailwater Capital, the company said in a press release Sept. 8.

With the deal, Williams acquires 80 miles of fully contracted gas transmission pipelines and 36 Bcf of natural gas storage in the Dallas-Fort Worth market in Texas.

Williams executed the deal with an eye on demand for reliable gas-fired generation in Texas, plus growing demand for storage services for Permian Basin-produced gas bound for LNG export terminals on the US Gulf Coast.

"Serving one of the fastest growing population centers in the United States, this irreplaceable natural gas infrastructure is critical to bridging the gap between limited supplies and periods of peak demand, while supporting the viability of intermittent renewables like solar and wind," Williams President and CEO Alan Armstrong said in a press release Sept. 8. "Throughout the extreme cold of Winter Storm Uri, the NorTex pipeline and storage facilities reliably provided gas to residential customers and electric power plants."

Demand for gas-fired generation in Texas is up sharply in 2022, helping explain Williams' move to acquire gas infrastructure assets linked to around 4 GW of power generation. Power burn demand in the state has averaged 4.86 Bcf/d thus far in 2022, up nearly 9% from 2021's average and an all-time annual record for average daily demand if sustained, according to data from Platts Analytics.

US LNG exports from an expanding number of terminals in the Gulf Coast are also widely expected to support growth in demand for gas storage and transmission in Texas in coming years. Feedgas deliveries to US LNG terminals have averaged 11.9 Bcf/d year to date in 2022, an 11% increase over the 2021 daily average and also a new annual record for average daily demand if sustained, data from Platts Analytics shows.

Expanding footprint

Williams' NorTex deal should firm up its positioning among Permian Basin gas producers and LNG demand centers in the Gulf Coast. NorTex Midstream's largest storage asset is the Worsham-Steed Gas Storage facility in Jack County, Texas, which connects to the 450 MMcf/d Worsham-Steed gas transmission pipeline running southward to the Tolar Hub in Hood County, Texas. The Tolar Hub connects to five Texas intrastate pipelines with more than 2 Bcfd of pipeline take-away capacity, according to previous communications from NorTex.

Williams has already made a few strides toward positioning itself as a bridge between key gas-producing areas and Gulf Coast LNG markets.

In late June, the midstream player authorized the final investment decision on its Louisiana Energy Gateway project, which will gather 1.8 Bcf/d of natural gas produced in the Haynesville basin for delivery to LNG export points along the Gulf Coast and other sources of demand in the region when it enters service in 2024. In March, Williams announced a $950 million deal to acquire Trace Midstream, operator of gas gathering and processing in the Haynesville which will complement the Louisiana Energy Gateway project.