Low commodity prices and the consequent slowdown in the natural gas patch prompted Williams Partners to slash its 2016 capital spending plan by $1.2 billion — a reduction of 32% to about $2.1 billion from previous plans as projects are deferred, delayed or canceled.

The partnership also cited a higher cost of capital as spurring the reduction and said it will monetize assets during the first half of the year to avoid having to tap equity markets.

“Our strategy remains intact, and the underlying fundamentals of our business are strong despite the slower growth rates producers currently face,” said Alan Armstrong, CEO of Williams Partners’ general partner, Williams. “We continue to execute on critical demand-driven infrastructure projects that serve the long-term natural gas needs of local distribution companies, electric power generation, LNG [liquefied natural gas] and industrial sources. Our revised capital plan addresses the realities of our current market environment while continuing to invest in the growing demand side of our business.”

The $2 billion plan includes $1.3 billion for Transcontinental Gas Pipeline (Transco) expansions and other interstate pipeline projects, most of which are fully contracted with investment-grade customers, the partnership said. “Non-interstate pipeline growth capital funding needs total $700 million, primarily reflecting relatively modest additional investments across the partnership’s gathering and processing systems. Capital spending for gathering and processing in 2016 will be limited to known new producer volumes, including wells drilled and completed awaiting connecting infrastructure,” it said.

There has been “dramatically reduced growth in production areas,” Williams Partners said. This, combined with lower commodity margins and more costly capital, “will drive both lower capital and lower ongoing expenses that we expect to be significant.”

Last week, the partnership’s Transco unit raised $1 billion of senior notes to fund spending.

Williams Partners said it plans to eliminate equity needs this year through asset monetizations worth more than $1 billion during the first half of the year. There are no plans to issue public equity or debt this year, and investment-grade credit ratings are expected to hold. Williams Partners liquidity was $2.984 billion as of last Friday, it said.

A fourth quarter unitholder distribution of 85 cents is consistent with the prior quarter. The partnership’s fourth quarter 2015 cash distribution coverage is expected to be about 1.0-times, excluding the benefit of a $209 million incentive distribution rights waiver relating to the termination of the merger agreement between Williams and Williams Partners.

Fourth quarter gathered volumes grew across the partnership’s natural gas gathering and processing operations in the Northeast and remained stable in the West, it said. The Geismar Olefins plant in Louisiana operated at nearly 102% of its recently expanded capacity for the fourth quarter. Williams Partners completed construction on Transco’s Leidy Southeast expansion project, the Kodiak tieback to Williams Partners’ Devils Tower in the deepwater Gulf of Mexico, and the expansion of the Redwater fractionation facility associated with Williams’ Horizon Offgas liquid extraction plant in Canada.

The Williams board recently affirmed its commitment to completing the planned combination of Williams Companies Inc. and Energy Transfer Equity LP, which was announced last September (see Daily GPI, Sept. 28, 2015).

Fourth quarter and 2015 earnings are to be announced Feb. 17.

Williams Partners is not the first midstream player to swear off equity markets. After cutting its dividend last month, Kinder Morgan Inc. (KMI) management said the company would not fund growth with equity this year (see Daily GPI, Dec. 9, 2015). Last week, KMI announced cuts to its 2016 spending plans after posting a loss in the fourth quarter (see Daily GPI, Jan. 21).

Williams shares were up about 2.5% in early trading Monday. Williams Partners units were up about 6.5%.