Williams Sees Bright Future for Transco System

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Researched by Industrial Info Resources (Sugar Land, Texas)--Williams Companies Incorporated's (NYSE:WMB) (Tulsa, Oklahoma) Transcontinental natural gas pipeline system (Transco), the largest natural gas delivery system in the U.S., has had a record-breaking year so far and is only set to deliver higher volumes with continued expansions.

The pipeline system set a daily delivery record on January 1, only to be broken again January 5, when it delivered 15.58 million dekatherms. What the company calls the "Big 5" projects, completed last year, helped add to the record-setting delivery this quarter. In the company's conference call regarding fourth-quarter and full-year 2017 earnings, Chief Executive Officer Alan Armstrong said, "It certainly was an impressive quarter and full year for the Transco team. The 'Big 5' projects that we've referenced many times added approximately 25% pipeline capacity to Transco, which is saying something given the size of Transco to start with."

Two of these projects, New York Bay and Virginia Southside II, were placed into service during the fourth quarter. The New York Bay project occurred in New Jersey and allowed a pressure uprate from 960 to 1,000 pounds per square inch gauge to transport up to 115 million cubic feet per day of natural gas in Middlesex County. The project had an estimated total investment value (TIV) of $85 million. For more information, see Industrial Info's project report. The Virginia Southside II project in Virginia installed pipeline to transport up to 250 million cubic feet per day of natural gas from Brunswick County to Greensville County. The project had an estimated TIV of $195 million. For more information, see Industrial Info's project report.

With projects such as the $3 billion Atlantic Sunrise expansion in the northeast and the $161 Gulf Connector project in Texas, the Transco system is only set to continue its growth. The Atlantic Sunrise project is the largest-ever expansion of the Transco system and will carry natural gas from northeastern Pennsylvania to markets in the Mid-Atlantic and southeastern U.S. The pipeline will transport up to 1.7 billion cubic feet per day (Bcf/d) of natural gas. Armstrong said that the project "continues to make great progress. We have been dealt a challenging winter on the Atlantic Sunrise project, but a tremendous effort by our team managing the many contractors involved has kept this project on track and, importantly, in compliance with the many environmental regulations. ... Today we are greater than 30% complete on the pipeline segment and, importantly, greater than 40% complete on the compressor stations." Williams is targeting a July startup for the mainline portion of the pipeline. For more information, see Industrial Info's project reports on the Pennsylvania North, Pennsylvania South and "Grugan" Loop portions of the project.

Williams' Gulf Connector project on the Transco system will feed up to 475 million cubic feet per day to liquefied natural gas (LNG) plants on the Texas and Louisiana gulf coasts. Construction began earlier this year, with a targeted in-service date in the first quarter of 2019. "We really have built out quite a delivery system along the Gulf Coast, being able to serve all the growing LNG, and the Gulf Connector will be the second big addition to that," said Armstrong. For more information, see Industrial Info's project reports on the Wharton and Victoria portions of the project in Texas.

Armstrong said that increased production from the Marcellus Shale had led to the expansion of the company's Oak Grove natural gas liquids (NGL) extraction plant in West Virginia. The project will provide an additional 200 million cubic feet per day of NGL extraction capacity, bringing total processing capacity to 400 million cubic feet per day. Construction is expected to kick off this quarter, with completion set for the summer. Ref-Chem LP (Odessa, Texas) is providing design engineering on the project, which has an estimated TIV of $100 million. For more information, see Industrial Info's project report.

Armstrong said Williams had filed with the U.S. Federal Energy Regulatory Commission for the Gateway expansion project, which will serve markets in New Jersey in New York on the Transco system. The project involves addition of a compressor station to transport up to 65 million cubic feet per day of natural gas between Mercer County, New Jersey, and Bergen County, New Jersey. The project has a targeted in-service date of 2021. For more information, see Industrial Info's project report.

Williams reported fourth-quarter 2017 net income of $1.7 billion, compared with a net loss of $15 million in fourth-quarter 2016. Full-year net income was $2.2 billion, compared with a net loss of $424 million in 2016. The company's full-year earnings benefitted from the recognition of an income tax provision benefit of $1.9 billion due to the U.S. Tax Reform Act in December.

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