Williams 'overwhelmed' with data center interest for natural gas supply across US

Natural gas midstream giant Williams is receiving an "overwhelming" interest in expansions to meet growing demand from data centers, but it is not immediately planning any more Transco expansion projects on the Atlantic Coast beyond the 1.6 Bcf/d Southeast Supply Enhancement project, CEO Alan Armstrong told investors Aug. 6.

"Particularly in the Southeast and the mid-Atlantic...we frankly are kind of overwhelmed with the number of requests that we're dealing with and we are trying to make sense of those projects," Armstrong said during the company's second quarter earnings call.

For now, the company is focused on delivering the 1.6 Bcf/d Southeast Supply Enhancement, which will increase southbound capacity from station 165 on Transco to Virginia, the Carolinas, Georgia and Alabama.

"It doesn't make any sense for us to be making any announcements when we've got a large project that we've committed to our customers to do everything we can to get that permitted cleanly and push that ahead," Armstrong said.

The project has been pre-filed with the Federal Energy Regulatory Commission and has a target in-service date in the fourth quarter of 2027, the company said in its investor presentation.

Williams sees opportunities around the country from data centers. Developers "are looking to find where they can -- because the time is of the essence, probably more than we can even imagine in our business," Armstrong said.

The company is looking at how to respond to demand in "the Rocky Mountain states, particularly in eastern Washington, the Quince area, in Idaho, in the Salt Lake City region," Armstrong said.

He also pointed to opportunities in places like Wyoming, "where we have a lot of gas resource available and a lot of wind resource available as well."

Regulatory challenges

Executives expressed optimism that regulatory issues around two pipeline projects would be resolved.

A District of Columbia Circuit Court July 30 vacated FERC's authorization of Transco's 829 MMcf/d Transco Regional Energy Access expansion project in the Northeast on July 30, just days after FERC granted permission for full service to begin.

"We believe the court's concern about the FERC process is once again flawed and will be fairly easy for FERC to resolve," Armstrong said.

Gas continues to flow on the expansion in the meantime.

Williams expects FERC to defend the certificate.

"We'll be seeking rehearing on a timely basis, and that's probably about 35 days out at this point, maybe 37, 38," General Counsel Lane Wilson said. "But we don't have any concerns that we're going to be able to continue to operate, don't have any concerns about getting a temporary certificate and ultimately don't have any concerns about defending what FERC has done on this project."

The company's 1.8 Bcf/d Louisiana Energy Gateway project is the subject of a more unusual FERC dispute. Williams considers the interstate project to be a gathering line, but competitor Energy Transfer in April filed a petition arguing it should be considered a transmission line requiring FERC authorization.

"We fully anticipate that FERC is either going to dismiss this matter or find that LEG is a gathering system," Chad Zamarin, executive vice president, said. "We really don't have any concerns there."

Williams notified FERC July 19 it had begun construction on the pipeline, which will transport gas from the Haynesville shale to southern Louisiana. It continues to target a second half of 2025 in-service date.

In a July 22 filing, Energy Transfer criticized Williams' decision to begin construction "at a time when there are serious questions about whether Williams' LEG project is a transmission pipeline subject to the Commission's jurisdiction."

Louisiana expansions

Construction has also begun on Transco's 364 MMcf/d Texas to Louisiana Energy Pathway, with an expected in-service date in the first quarter of 2025.

The project "provides our anchor shipper, EOG Resources, with access to the LNG corridor in higher-priced markets on the Transco Pipeline and specifically all the way into the Louisiana market," Armstrong said.

Williams is also planning to add backhaul capacity on Transco. It has completed an open season for the Gillis West expansion to provide 115 MMcf/d of backhaul capacity into Texas from Louisiana from the fourth quarter of 2025. The project will help Texas utility CenterPoint "reduce their dependence on the Texas intrastate gas pipeline systems," Armstrong said.