Williams, building its natural gas portfolio to move more supply to the Gulf Coast and beyond, has snapped up NorTex Midstream Partners LP in a $423 million deal that expands Texas opportunities.

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The NorTex purchase, from an affiliate of private equity firm Tailwater Capital, includes 80 miles of gas transportation pipelines, 36 Bcf of storage and the Tolar Hub, the largest in the Dallas-Fort Worth region. It also provides service to about 4 GW of gas-fired power generation for the area.

“Serving one of the fastest growing population centers in the United States, this irreplaceable natural gas infrastructure is critical to bridging the gap between limited supplies and periods of peak demand, while supporting the viability of intermittent renewables like solar and wind,” CEO Alan Armstrong said. 

“During the extreme cold of Winter Storm Uri, the NorTex pipeline and storage facilities reliably provided gas to residential customers and electric power plants throughout the entire storm. We see significant upside to integrating these assets, especially when combined with our existing transmission and storage capabilities.”

LNG Growth Agenda

“In addition to providing critical gas supply to power generation in North Texas, these assets also position Williams to provide storage services for Permian gas directed toward growing Gulf Coast LNG demand,” the Tulsa-based midstream giant noted. 

During the firm’s 2Q2022 earnings conference call in August, Armstrong had noted the liquefied natural gas export potential. He cited “strong fundamentals driving a great pipeline of growth opportunities, particularly increasing demand for U.S. LNG exports and power generation” along the mainline Transcontinental Gas Pipe Line corridor.

Williams recently inked an LNG-related transaction with PennEnergy Resources LLC to deliver supply from the Appalachian Basin. Williams in June also sanctioned the Louisiana Energy Gateway, a 1.8 Bcf/d system designed to move Haynesville Shale supply to industrial markets and for export overseas.

[Want today’s Henry Hub, Houston Ship Channel and Chicago Citygate prices? Check out NGI’s daily natural gas price snapshot now.]

Tailwater acquired NorTex in February 2021, shortly after Uri swept across Texas and less than a year after it launched a $1 billion fund to finance midstream transactions. NorTex during Uri delivered more than 5 Bcf to customers and provided enough supply to heat and power about 380,000 homes, “saving customers more than $800 million or the equivalent of over $2,100 per household,” management noted. 

Today, NorTex operates the largest portfolio of nonutility gas storage facilities in North Texas. In addition to Tolar, it owns and operates the Worsham-Steed and Hill-Lake gas storage facilities.

“Tailwater shared our vision and deeply understood the essential role our infrastructure plays in today’s evolving market,” said NorTex CEO John Holcomb. “That alignment allowed us to work together to have an immediate and substantive impact, and position our business for long-term, sustainable success as the partner of choice and premier provider of dependable natural gas storage services in the greater Dallas-Fort Worth region…I look forward to our next chapter with the Williams team.”

Tailwater co-founder Edward Herring said the partnership with NorTex exemplified the equity fund’s approach to “working alongside best-in-class management teams and leveraging our operational expertise to accelerate growth, unlock value and support the transition to a low-carbon economy.”

Tailwater partner Stephen Lipscomb said when the firm began the partnership, “we did so with the conviction that the energy transition would require thermal generation to deliver power at a moment’s notice during periods of renewable intermittency. That conviction was tested immediately with Winter Storm Uri, and NorTex delivered on its reputation of reliability, flexibility and high-quality solutions for customers.” 

Dallas-based Tailwater currently manages more than $3.8 billion in committed capital. It said it has executed more than 100 energy transactions in the upstream and midstream sectors, which represent more than $22 billion in transaction value.