Midstream giant Williams reported record natural gas gathering and processing (G&P) volumes in the Appalachian region during the third quarter, driven by higher prices in the region.

Williams earnings

Gross gathering volumes for the Northeast G&P segment rose 8% year/year (y/y) to 9.4 Bcf/d, while gross processing plant inlet volumes swelled by 17% to 1.4 Bcf/d, management said during a third quarter earnings conference call. Natural gas liquids (NGL) production volumes from the segment rose 24% to 114 million b/d.

The volumes were all-time highs across the board for the Tulsa-based operator.

Recent highlights for Williams also include the partial in-service of the Southeastern Trail expansion of the flagship Transcontinental Gas Pipe Line Co. LLC (Transco) system. 

The company brought 150 MMcf/d of the 296 MMcf/d expansion online Nov. 1. Up to an additional 80 MMcf/d is expected online before the end of the year, with the balance of the expansion expected in-service in early 2021.

Williams also filed a Federal Energy Regulatory Commission pre-filing application in June for the 760 MMcf/d Regional Energy Access expansion on Transco, which aims to connect Marcellus Shale gas supplies with growing Northeast demand in time for the 2023-2024 heating season.

“This strong performance is evidence of the attractive position of our Northeast business as gas market fundamentals begin to call on U.S. dry gas supplies,” CEO Alan Armstrong told analysts. He highlighted that Williams is the largest gatherer in the Appalachian Basin, the country’s most prolific source of gas production, propelled by the Marcellus and Utica shales.

“Our dedications include the most attractive acreage operated by resilient producers that continue to demonstrate their ability to continuously improve on their cost structures,” he said. “You can see this playing out as our Northeast gathering volumes grew faster than the total Northeast supplies…

“So we really are not only in the right basin, but we’re also in the right parts of the basin in the Appalachian area. We expect this trend to continue in response to the very favorable forward strip pricing in ’21 and a very well-positioned group of customers in both the Marcellus and Utica.”

Williams expects to meet its pre-Covid 2020 earnings guidance set last December. Armstrong attributed the company’s durability to “the premier positions of our natural gas infrastructure” and measures taken “to reduce leverage, increase stability and lower costs…Our gathering and processing business continues to benefit from our basin diversity, specifically in gas-directed areas where drilling remains active.

“In addition, we continue to grow services to key producers in the Gulf of Mexico deepwater, where we have major dedications.”

Williams has “been fortunate to contract for some very large and exciting new developments” in the deepwater Gulf of Mexico, including the Spruance and Taggart developments. Both are targeting first production in the first half of 2022, the CEO said. They are operated by Covington, LA-based LLOG Exploration Offshore LLC.

Amid rising global demand for liquefied natural gas (LNG), “we have confidence that producers see this as an attractive market and will be able to respond very effectively to the increasing call on gas supplies, particularly in the very best of the Marcellus, Utica and Haynesville shales…which we are so fortunate to serve.”

Prices in these gassy plays have been boosted by reduced production of oil and associated gas in oiler regions such as the Permian and Williston basins.

Armstrong said “gas demand will be driving our business and the forward market certainly is driving many of our customers to make plans for growth across a lot of our systems…”

Like many operators across the upstream and downstream energy sectors, Williams is aiming to reduce its greenhouse gas (GHG) emissions and move toward net-zero carbon emissions by 2050. The plan is to achieve a 56% absolute reduction in company-wide GHG emissions by 2030 versus 2005 levels, and net zero carbon in 30 years.

“As the world moves to a low-carbon future, we believe natural gas is key to reducing emissions on a global scale while supporting the growth of renewables and helping our customers and stakeholders meet their energy needs and climate goals,” Armstrong said.

Williams is forecasting growth capital expenditures of $1-1.2 billion for full year 2020, slightly under the high end of original guidance of $1.1-1.3 billion.

Williams reported net income of $308 million (25 cents/share) for the quarter, up from $220 million (18 cents) in 3Q2019.