Williams bullish on 2021 midstream outlook on US gas demand, price signals: CEO

Houston — Williams expects strong natural gas demand to further boost its US pipeline volumes and Northeast gathering and processing operations in 2021, CEO Alan Armstrong said Nov. 3.

During a conference call with analysts to discuss third-quarter financial results, Armstrong said the operator of the Transcontinental Gas Pipe Line and other midstream energy infrastructure has a bullish outlook, in part because of the pickup in US LNG exports in recent weeks.

In addition to the positive demand signals, he pointed to forward prices that could incentivize more drilling in key basins and, in turn, drive higher flows on Williams' transportation network. The company is ramping up service on its Southeastern Trail expansion project ahead of schedule, while it also expects early startup of its Leidy South expansion.

"Exports, both LNG and pipeline exports to Mexico, are up this year, even after dealing with a very warm winter in Europe, resulting in a summer of low LNG exports," Armstrong said. "And we're now, as you are well aware, I'm sure, seeing LNG flows rebounding near the highs that we saw earlier in the year. As we've said before, demand is truly the key to our business. And this demand picture is driving the price response we are seeing."

Armstrong said continued price increases could eat into demand growth, and Williams will be watching closely for how producers respond.

"However, we have confidence that producers see this as an attractive market and we'll be able to respond very effectively to the increasing call on gas supplies, particularly in the very best of the Marcellus, Utica and Haynesville shales, of which we are so fortunate to serve," he said.

Williams continues to expect 2020 growth capital spending of $1 billion to $1.2 billion, down from original guidance of $1.1 billion to $1.3 billion. The company expects to provide 2021 financial guidance in February.

Southeastern Trail now has 150 MMcf/d of its total 296 MMcf/d of incremental Transco capacity placed into service as of Nov. 1. Another 80 MMcf/d of capacity could be in service by year-end, Williams said. Within the next month, 125 MMcf/d of the 582 MMcf/d capacity from Leidy South is expected to be online, a year ahead of target, Williams said.

Southeastern Trail is an expansion of the Transco pipeline system that will boost gas supplies to the mid-Atlantic and southeastern US. Leidy South is an expansion of Williams' existing Pennsylvania energy infrastructure designed to connect supplies of natural gas in northern and western Pennsylvania with demand markets along the Atlantic seaboard.

With the outcome of the Nov. 3 US presidential election pending, Williams appears not to be too concerned about possible changes in fossil fuel policy depending on who wins.

"We feel like that natural gas in a sober, less-polarized moment is going to be a really important tool to continue to utilize renewables in a cost-effective manner and to continue to decarbonize energy use here in both the US and around the world," Armstrong said.

"If the focus is just around eliminating fossil fuels, that's a different story. But if we really get serious about decarbonization, we think our business is extremely well positioned in that environment."