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US Gulf Coast LNG surge boosts Williams' opportunities in Haynesville: COO

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US Gulf Coast LNG surge boosts Williams' opportunities in Haynesville: COO

Highlights

Feedgas deliveries to terminals imply near full utilization

Northeast producer maintenance mode not seen as problem

Louisiana's Haynesville shale provides the biggest near-term growth opportunity for Williams in its West segment due to demand for feedgas supplies to serve surging US Gulf Coast LNG exports, Chief Operating Officer Micheal Dunn said May 20.

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The operator of the Transcontinental Gas Pipe Line and other midstream infrastructure wants to leverage its scale and relatively low capital requirements to maintain some of its assets to take advantage of the evolving market dynamics, Dunn said during an investor conference in Las Vegas that was webcast.

US LNG feedgas deliveries have persisted at seasonally high levels, averaging volumes so far in May that imply terminal utilizations of around 94%, according to S&P Global Platts Analytics data. Producers in the Haynesville have consequently increased activity, boosting opportunities for pipeline, gathering, processing and storage companies.

"We're very optimistic for the Haynesville and the firming of natural gas prices going forward," Dunn said. "That's probably our biggest growth area in the West right now."

Besides Louisiana, Williams' West segment also includes assets in Texas, Colorado, Kansas, Oklahoma, Utah and Wyoming.

Asset sales if market right

Dunn said Williams is continually evaluating assets for sale, including in its West segment, if the market is right.

"If somebody comes along and is interested in some or all of those assets, we'll consider that," he said.

In the Gulf of Mexico and Northeast regions, Williams also sees opportunities to benefit from its diverse natural gas footprint.

"We're very excited about the opportunities that we see in the Gulf of Mexico," Dunn said.

Williams owns and/or operates significant natural gas transmission, gathering and processing assets around the Gulf Coast states, both onshore and offshore.

Bolt-on transactions possible

In the Northeast, its midstream infrastructure serves the prolific Appalachian Basin. While many big producers there are in maintenance mode, in which they are keeping output flat, Williams believes it can grow revenues. It also could pursue strategic bolt-on transactions, Dunn said.

"Our philosophy is to be large and to have scale where we have assets," he said. "We continue to do that in the Northeast."

Dunn said the operator still has latent capacity that it can take advantage of. He added that incremental transmission projects coming online in the region will continue to unlock constraints over time.

He even sounded a note of optimism about EQM Midstream Partners' Mountain Valley Pipeline, which has been delayed amid legal and permitting hurdles -- aided by persistent challenges from environmental groups -- and recently pushed back its in-service target to the summer of 2022. EQM is a unit of Equitrans Midstream .

"We do believe that one will ultimately get finished," Dunn said.