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Atlantic Sunrise Waiting For Keystone State Greenlight

The Keystone State is currently seen by Williams CEO Alan Armstrong as the most significant regulatory piece yet to fall into place for Transcontinental Gas Pipeline's (Transco) Atlantic Sunrise project.

"We've been working very closely with the state [of Pennsylvania]," Armstrong said Thursday in response to a question during an earnings conference call. "They've been very cooperative, and they very much understand that we're going to do things right, and they are really doing the right job of keeping things on schedule on their side.

"So we're feeling very good about the work going on there with the state of Pennsylvania. Certainly, the Mariner East 2 and the PennEast [Pipeline Co.] approvals this last week are good evidence of them continuing to execute on their side."

Besides permits from Pennsylvania regulators, Atlantic Sunrise also needs approval from the U.S. Army Corps of Engineers, which is "moving along very handily as well," Armstrong said.

Early this month FERC approved Atlantic Sunrise, just in time before the departure of another commissioner left the regulatory body's hands tied.

Atlantic Sunrise would open a path for constrained Marcellus gas to reach markets in the Southeast through the Transco system running along the Atlantic seaboard. The expansion would include 197.7 miles of pipeline composed of about 184 miles of new 30- and 42-inch diameter pipeline for the greenfield CPL North and CPL South segments in Pennsylvania; about 12 miles of new 36- and 42-inch diameter pipeline looping known as Chapman and Unity Loops in Pennsylvania; about three miles of 30-inch diameter replacements in Virginia, and associated compressor stations, equipment and facilities.

"There is significant support for the [Atlantic Sunrise] project from both business, industry, general industry in the area and as well as big labor organizations who realize the value of the Atlantic Sunrise system to both Pennsylvania and to the U.S. economy," Armstrong said. "But Atlantic Sunrise really is just one example of projects we're pursuing as we transform our asset portfolio to deliver fee-based, predictable and stable cash flows from connecting prolific supply basins to growing markets."

Armstrong noted the recent transaction by Williams Partners LP to increase its ownership stake in two Marcellus Shale gas gathering systems in northern Pennsylvania through an exchange of Permian Basin assets.

Williams gathering and pipeline assets are ready for when more production comes online in the Northeast and elsewhere, Armstrong said during the earnings call. And if the Northeast is unable to supply all of the growing demand in the Southeast and Gulf Coast region, Williams has assets to help out in the Haynesville Shale, he reminded analysts.

The Haynesville is "...an area that has further advantage if the Northeast takeaway capacity isn't able to supply most of the coming demand in the Southeast U.S.," he said. "So we view our position here as very strategic...As we look at production here in the U.S. right now and we see that continuing to fall, it's going to be really hard for -- as prolific as the Northeast is -- it's going to be hard for it to make up all of the production decline that we're seeing across the U.S. without the infrastructure coming on here in 2017.

"...[W]e continue to see production, U.S. production, continuing to fall. And yet, the market doesn't seem to be responding all that much yet. That is going to come home to roost."

Williams Partners reported fourth quarter net income of $145 million, a $1.789 billion improvement over the fourth quarter of 2015, driven mainly by the absence of a $1.1 billion impairment of goodwill and $580 million of lower impairments of equity-method investments. Williams Partners reported 2016 net income of $431 million, a $1.88 billion improvement compared to full-year 2015 results.

Williams reported a fourth quarter net loss of  $15 million, a $700 million improvement from the fourth quarter 2015 net loss, due primarily to the absence of a $1.1 billion pretax impairment of goodwill and $698 million of lower pretax impairments of equity-method investments and other assets. For the year, Williams reported a net loss of $424 million, a $147 million improvement when compared to results for full-year 2015.

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