Tulsa-based midstreamer Williams said Thursday it completed its purchase of Sequent Energy Management LP and Sequent Energy Canada Corp. from Atlanta utility Southern Company.
Sequent is among North America’s largest natural gas marketers by sales volumes, seventh to be precise, at 7.1 Bcf/d according to NGI’s 1Q2021 Top North American Natural Gas Marketers Rankings.
The transaction “accelerates Williams’ natural gas pipeline and storage optimization and marketing growth and increases Williams’ gas pipeline marketing footprint to over 8 Bcf/d, with expansions into new markets to reach incremental gas-fired power generation, liquefied natural gas (LNG) exports and future renewable natural gas (RNG) and other emerging opportunities,” the midstream pipeline giant said.
Sequent traditionally marketed gas through transportation and storage agreements on assets including Williams’ flagship Transcontinental Gas Pipe Line Co. LLC, aka Transco system. It provides natural asset management and wholesale marketing, trading, storage and transportation for a diverse set of gas utilities and producers, said Williams.
Williams CEO Alan Armstrong said management “sees significant opportunity to better source and deliver responsibly produced, low carbon supplies to domestic natural gas and LNG customers” through the acquisition.
“Sequent’s operational footprint in the U.S. and Canada provides Williams with an enhanced North American perspective of natural gas markets, in turn bolstering the company’s natural gas focused strategy,” he added.
Sequent generated net income of more than $100 million for Southern during the first quarter, largely because of robust sales amid Winter Storm Uri in February.
The acquisition comes at a time of rising gas demand in the United States, driven largely by resurgent LNG exports, explained NGI’s Patrick Rau, director of strategy and research, in the latest episode of NGI’s Hub and Flow podcast.
“2020 was the first down year for the U.S. natural gas market since 2005 or just before the shale revolution,” Rau said. Supply and demand both fell compared with 2020 because of the pandemic, with the biggest impacts seen in the second and third quarters.
“Interestingly, domestic consumption really hung in there,” Rau said. LNG exports took the biggest hit among the different demand segments.
Sequent’s 3% year/year increase in 1Q2021 sales volumes was atypical, as the 23 firms with comparable data reported a 3.1% decline in volumes as a group versus 1Q2020.
This was related to the fact that Covid-19 had not yet begun to majorly impact the U.S. gas market in 1Q2020, Rau said.
The United States is likely to see substantial year/year increases in marketed gas volumes during the second and third quarters this year, Rau said. That should be driven largely by resurgent LNG export demand and the fact that 2Q2020 and 3Q2020 saw the biggest impacts from the pandemic.
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