Williams takes FID on Louisiana Energy Gateway in step forward for certified LNG exports

Haynesville natural gas should have better connectivity with the US Gulf Coast market starting in 2024 now that Williams is advancing its 1.8 Bcf/d Louisiana Energy Gateway gas gathering trunkline system. The project is set to enable record deliveries of Haynesville-certified gas to US LNG exporters.

Williams announced it had reached a final investment decision on the project, also known as LEG, on June 29. Executives had hinted in the company's May 3 Q1 2022 earnings call that progress was quickly being made toward securing enough long-term transportation commitments to proceed, with agreements already in place with Rockliff Energy and Williams' joint venture with GeoSouthern.

The company intends to deploy end-to-end greenhouse gas emissions monitoring and reporting technology to the new gathering system, supported by partnerships with Context Labs, Encino Environmental and Satlantis. Carbon capture and storage infrastructure could also be developed alongside the project, the company said in a June 29 statement.

"By leveraging our scale, value chain integration and unique capabilities, we are unlocking capacity for Haynesville production growth and facilitating the delivery of next gen gas to meet the climate goals and the energy needs of our customers and our country," Williams CEO Alan Armstrong said in a June 29 statement.

Williams expects LEG to enter commercial service in late 2024.

Haynesville renaissance

Williams has beefed up its position in Louisiana and East Texas over the last year, greenlighting a Transco expansion to increase East Texas-to-Louisiana capacity and agreeing in March to acquire the Haynesville gathering and processing assets of Trace Midstream. The acquisition will more than double Williams' existing 1.8 Bcf/d of gathering capacity in the basin to over 4 Bcf/d.

The midstream operator is not alone in its pivot to the Haynesville. With the basin's proximity to the US LNG export fairway and Gulf Coast industrial complex, the Haynesville Shale has attracted additional attention and activity over the last several years from players across the natural gas value chain. The new wave of investment has helped put the Haynesville on track to see its highest annual gas production on record in 2022, data from S&P Global shows. The basin has averaged 14.4 Bcf/d year-to-date, up 1.3 Bcf/d from the same time in 2021.

By providing additional gathering capacity, Williams executives believe that LEG can help alleviate the risk of rising production outstripping takeaway capacity that other basins, such as the Permian and Marcellus, have experienced. Constrained basins often see basis spreads plummet, dis-incentivizing operators and smothering production growth.

"There is a lot of competition, but we do believe building out the LEG project will eliminate any basis risks that we see for our production there with our partner GeoSouthern in that South Mansfield area as well as our customers on our gathering system," Chief Operational Officer Michael Dunn said at a June 22 conference.

Certified gas dynamics

With more than 50% of Haynesville gas set to undergo third-party certification by the end of 2022, LEG could not only unlock more Haynesville gas production but also facilitate the uptake of producer certified gas into US LNG exports out of the Gulf Coast.

For European utilities under pressure to simultaneously find alternatives to Russian pipeline gas and honor ambitious environmental policies, buying US gas that has been independently verified as meeting certain environmental, social, and governance standards has been floated as a potential solution to both problems.

Most recently, Sempra Infrastructure said May 25 that it will consider sourcing responsibly sourced gas at its proposed Port Arthur LNG facility as part of ongoing discussions with Germany's RWE to reach a long-term sales and purchase agreement. Uniper, which holds offtake capacity at Freeport LNG, signed a multiyear supply agreement with Southwestern for certified gas.

Earlier this spring, NextDecade's proposed Rio Grande LNG facility pledged to source some certified gas, which was later followed by French multinational energy company Engie signing a long-term supply agreement.