INTERVIEW: Shrinking brownfield pool leading Williams to contemplate new gas pipelines, storage

Williams expects the US natural gas market to demand more greenfield pipeline capacity from the midstream operator as it begins to exhaust options for brownfield expansions along its existing network, Executive Vice President Chad Zamarin said during a Sept. 18 interview.

The company's active project portfolio includes approximately 2.8 Bcf/d in capacity expansions along the Transcontinental Gas Pipe Line, as well as some smaller-scale gathering expansions in the Northeast.

"You're going through communities that already have a right of way that you can parallel; a lot of it can be done through compression additions and not new pipe," Zamarin said of the major advantage with expansions. "I will say a lot of that is plucking kind of the low-hanging fruit."

Many of the greenfield midstream projects under active development are intrastate lines in South and West Texas, areas where Williams has limited activities.

For the company to entertain new interstate projects elsewhere within its footprint, Congress must pass substantial permitting reform that places some restrictions on project opponents' ability to litigate against new infrastructure, Zamarin said.

"Projects just will not get private funding, and companies like ours are not going to risk building infrastructure if those issues" cannot be resolved, he said.

Challengers recently recorded a victory against one of Williams' Transco projects, the 829 MMcf/d Regional Energy Access expansion in the Northeast. Williams placed the project into full service earlier in the third quarter, butthe US Court of Appeals for the District of Columbia Circuit then vacated its Federal Energy Regulatory Commission authorization.

Williams appealed the decision and asked FERC to issue a temporary certificate to ensure operation of the REA project facilities through winter.

Zamarin said Williams is confident FERC will issue a temporary certificate to keep the project up and running for the historically strained winter Northeast regional gas market.

AI and power demand

Williams has been in direct talks with technology companies searching for on-site power solutions as they plan to build out their artificial intelligence-supporting data center facilities, according to Zamarin.

"The model [for data centers] has been plug into the grid, and I just access grid power, and I build diesel power backup," he said. "We think there might be a model where we build gas power generation behind the meter for a data center."

The addition of large industrial customers, especially data centers, is expected to push on-grid peak power demand higher in the coming years, likely resulting in a "stronger call on gas-fired generators," S&P Global Commodity Insights assessed in a long-term North American gas market outlook updated in September.

By 2030, Lower 48 peak power demand needs are projected to reach 870 GW, an increase from around 800 GW in 2023, according to that outlook.

"You can potentially envision a world where you have less average gas demand, but you need more capacity when the peaks happen because you've created more peak gap to fill [with renewables]," Zamarin said. "We have pipelines that, yes, they under operate for much of the year, but the day in winter when you need it the most, that's when we've got to turn it on."

Storage needs

The premium on natural gas storage capacity is rising as market participants seek more flexibility, which has led Williams to acquire storage assets in the Rockies and Gulf Coast regions.

The company is also exploring the prospect of greenfield storage projects, especially along the Gulf Coast, to build additional flexibility into the market, Zamarin said.

"The way you produce 100 Bcf a day consistently, but you deliver into a market that is changing, is you flex with storage," he said. "We've got to be able to absorb the volatility of LNG."