As natural gas demand increasingly shifts to the Gulf Coast for liquefied natural gas (LNG) exports, Tulsa-based pipeline giant Williams will seek to connect more Lower 48 gas supply to its Transcontinental Gas Pipeline Company LLC (Transco) trunkline over the coming years, executives said Thursday at the company’s analyst day in New York.
Senior Vice President Chad Zamarin, who handles corporate strategic development, said that while the Haynesville Shale in Northwest Louisiana and East Texas is geographically close to large demand markets, the basin’s existing takeaway capacity mainly serves markets other than the Gulf Coast.
“So we will continue to see the need for infrastructure in order to move incremental gas from the Haynesville,” Zamarin said.
“The good news is, though, that we have a super attractive footprint in the Haynesville…and we’re focused on connecting our system and other supplies that are going to move out of the Haynesville to our infrastructure along the Gulf Coast and our Transco footprint.”
Although the Permian Basin of West Texas and southeastern New Mexico suffers from a lack of long-haul takeaway capacity, the economics currently do not support investment by Williams in a large-diameter, long-distance pipeline out of the basin, Zamarin said.
“That said, we keep a very close eye on the Permian, and as Permian supply migrates to the Gulf Coast, we will be expanding and reconfiguring our footprint and our Transco mainline, in order to deliver gas to key demand markets,” he added.
Williams expects combined supply growth of more than 30 Bcf/d from the Appalachian, Permian, and Haynesville basins over the next 10 years.
Zamarin highlighted that while upstream activity in the Permian swings largely on oil price economics, the Hayneseville depends almost exclusively on dry gas prices. Northeast supply, meanwhile, depends on the economics of both dry gas and natural gas liquids. Since Transco serves all three basins, it is well-positioned to respond to any pricing scenario, Zamarin said.
LNG exports are forecast to account for more than half of the 24.4 Bcf/d of demand growth in the United States for the 2018-2025 period, CEO Alan Armstrong said, citing forecasts from Wood Mackenzie.
Gas flows to LNG facilities on Transco stood at about 2.25 Bcf/d as of November, up from around 0.6 Bcf/d in January 2017. Williams currently delivers about 30% of all LNG feed gas in the United States.
Armstrong highlighted that emerging economies will account for the overwhelming majority of energy demand growth between now and 2040, presenting an opportunity for Lower 48 LNG exporters.
Williams has a backlog of 19 projects that it is actively pursuing, including eight to transport gas to LNG facilities, seven to serve industrial demand or local distribution companies, and four to transport gas to power generators.
The company has $3.2 billion of expansion projects in execution in the Atlantic-Gulf corridor, COO Michael Dunn said.
These projects have targeted in-service dates ranging from 2019-2023, and include the Northeast Supply Enhancement (fall 2021), Leidy South (late 2021), Regional Energy Access (4Q2023), and Gateway (4Q2019) expansion projects, which could add about 2 Bcf/d of combined capacity to serve Maryland, New Jersey, New York and Pennsylvania.
Plays in the Northeast, namely the Marcellus and Utica shales, will continue to be the country’s largest suppliers of gas over the coming years, Zamarin said. He noted there is more than 10 Bcf/d of excess takeaway capacity coming out of the Northeast.
“As supply continues to grow in the northeast, we will continue to adapt and expand the receipt and deliverability of our infrastructure to move gas in even more flexible ways,” Zamarin said.