The Williams Cos. have a plethora of opportunities unfolding, with natural gas still the backbone of all that is to come, CEO Steve Malcolm told shareholders on Thursday.

Speaking at the company's annual shareholder meeting, Malcolm stressed the importance of gas to Williams and to the U.S. energy future, which was a key in the $12 billion launch of the pipeline partnership earlier this year (see NGI, Jan. 25). The launch created Williams Partners LP, one of the largest master limited partnerships in the country.

"We firmly believe that this restructuring was the very best course of action we could take to fuel future growth and long-term value creation," Malcolm said. "In short, all of our businesses should benefit from this transaction -- and they already are."

The partnership controls nearly 15,000 miles of U.S. gas pipelines, including stakes in Northwest Pipeline GP, Transcontinental Gas Pipe Line and Gulfstream Natural Gas System.

Malcolm gave a nod to the economic downturn of 2009, which he said had contributed to sustained lower gas prices.

"As you know, the depressed commodity prices of the past two years have contributed to lower financial results compared to pre-recession periods," he told shareholders. "In fact, we saw energy commodity prices fall 70-80% during the economic slowdown.

"For example, crude oil dropped from $133 in July 2008 to $39 in February of last year. We saw similar declines in natural gas and gas liquids. So we're very pleased that crude oil and natural gas liquids have rebounded somewhat, even as we continue to experience relatively low natural gas prices."

However, Williams' business performance "does not rise and fall strictly in proportion to commodity prices. To the contrary, our portfolio is -- by design -- well balanced. Our mix of geographically diverse, regulated and unregulated, fee-based and commodity-based, businesses provides a natural hedge against market volatility," he noted.

"To be sure, market conditions have been volatile, which is part of the ongoing challenge of any energy business. But as economic conditions improved during the second half of 2009, so did our business performance. The market took note and responded, leading to a total return to our shareholders last year of almost 50%."

The Tulsa-based firm has growth opportunities in both established areas, such as the Rocky Mountains, and emerging areas, including the Marcellus Shale, said Malcolm.

"While most of our gas pipeline and midstream assets are now owned by Williams Partners, their contributions to Williams' integrated natural gas strategy are as important as ever..." as evidenced by "our entry into the Marcellus Shale."

Williams, he said, is building a "presence in a growth market where all three of our businesses can come together and contribute" from its exploration arm, midstream and pipeline segments.

The Piceance Basin also remains a reliable money-maker in the integrated strategy, Malcolm noted. Last year Williams added about 800 Bcf to its reserves from the Rockies basin, while the midstream unit placed into service the Willow Creek plant, and the pipeline group completed the Colorado Hub Connection, which connects the basin to Williams' Northwest Pipeline mainline system.

Looking ahead, "I'll repeat a phrase I've used before -- Williams continues to be 'opportunity rich.'" Malcolm said his "confident optimism" also is based on the growing role of natural gas across the country.

"There's a swelling chorus of voices on all points of the political spectrum who now are touting the indisputable advantages of natural gas. In the midst of our nation's focus on clean energy, it is clear that fossil fuels will remain a prominent part of our future for at least the next several decades..."

As the nation builds a renewable energy portfolio, "natural gas power plants offer the quick-start flexibility and reliability to support these intermittent energy sources. In addition, its role as a transportation fuel is growing...That's why many leading companies, including UPS and Walmart, and cities such as Los Angeles, New York and Washington, DC, are converting vehicle fleets to natural gas.

"I am more confident than ever...that the strategy of opportunistic but disciplined growth that we've pursued for the past few years will continue to produce the results we all expect from our company," the CEO said.

Opportunities also are expected to multiply as gas becomes an "even more integral part" of the U.S. energy picture.

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