Williams eyes Haynesville Shale as growth driver, certified gas opportunity: executives

22 Feb 2022 spglobal.com/platts

Highlights

Proposed 2 Bcf/d project to move certified gas to Transco, LNG exports

Efforts to track, reduce emissions on midstream infrastructure

Midstream operator Williams sees the Haynesville Shale as a major source of growth, both from a gathering perspective and as "wellhead to water" corridor to transport certified gas to LNG exporters hungry for lower emissions feedgas, executives said Feb. 22.

"We've been rapidly expanding our Haynesville system to support the growth we see from existing and new customers in the basin, including significant volume growth," Chad Zamarin, senior vice president of corporate strategic development, said during company's fourth-quarter earnings call.

Beyond infrastructure, the company has plans to help add more than 300 MMcf/d of new production in the basin by the end of 2022, through a joint-venture partnership with private equity-backed Haynesville producer GeoSouthern Energy. Williams entered into the GeoSouthern partnership to drive more volumes into its Haynesville midstream assets, Zamarin said.

GeoSouthern has brought two rigs into operation on the acreage in recent weeks, with plans to soon mobilize a third. First production is expected in the second quarter of 2022, with gas production expected to ramp up to 350 MMcf/d by the end of the year.

The company also sees the potential to grow its presence in the Haynesville through consolidation, Zamarin said.

"We'll consider opportunities that further enhance our footprint, create more capacity optimization opportunities and enable us to aggregate even more responsibly sourced gas supplies that we can direct to premium markets," Zamarin said.

Certified gas-LNG nexus

A key pillar of Williams' strategy in the Haynesville involves connecting the basin's growing supply of certified gas, also known as responsibly sourced gas or RSG, with nearby LNG exporters.

"We are very focused on positioning ourselves to have the infrastructure that can export responsibly sourced gas from key US basins and get those to these LNG facilities," CEO Alan Armstrong said. "And so we really think we're going to be an important player, not in the ownership of the actual LNG facility, but a lot of the key infrastructure that it's going to take to deliver this gas and to be able to do it with a responsibly sourced gas certificate."

As of Feb. 22, Haynesville producers had completed third-party certification on 1.2 Bcf/d of gas. Public producer commitments total 6.2 Bcf/d by the end of 2022, around 45% of year-to-date daily average Haynesville production.

Williams intends to connect this supply of certified gas to potential LNG buyers through a combination of existing and proposed infrastructure.

Around 75% of proposed LNG export terminals are located along Transco's path, Armstrong noted.

For new infrastructure, the company has proposed the 2 Bcf/d Louisiana Energy Gateway project, which would gather certified gas from multiple Haynesville producers and transport it south to the Gulf Coast. The proposed project would fill a gap in the regional gas transportation design, Zamarin said, which was originally constructed to move gas to the domestic demand markets in the Southeast and Northeast, rather than to the Gulf Coast.

William's acquisition of marketer Sequent Energy Management last year is also seen as facilitating this strategy, by providing a platform to aggregate and market certified gas, Armstrong said.

"In the future, we think there's an optimization opportunity to also include the next variable, which will be the emissions profile of the gas supply, the delivery and use and then the unique path through which we can move that energy to market," he said.

Tracking, reducing emissions

Part of William's value proposition would be providing a lower-emissions pathway for certified gas molecules to reach demand markets, which the company intends to achieve by measuring and reducing its own emissions.

Williams is already "piloting new sensor technology, satellite technology, software technology that can track the emissions across our footprint," Zamarin said.

In addition to efforts to measure emissions, Williams will embark on a multiyear phased replacement of up to 184 compressor units on its Transco and Northwest pipeline systems over the next five to six years, which the company expects will reduce methane emissions from transmission compressors by more than 50%.

Many of the compressor units slated for replacement were constructed in the 1950s and 1960s, Armstrong said, and they have a much lower efficiency rate than the technology available today. As a result, "you can replace maybe, 10 of these old reciprocating engines with one turbine, for example, so it's not 184 turbines we'll be installing, it's a much smaller number than that."

Financial results

For the quarter ended Dec. 31, Williams had a net income of $621 million, or 51 cents/share, up from a net income of $115 million, or 9 cents/share, in the year-ago quarter.

Approximately $66 million of the higher net income resulted from increased revenue from the company's upstream operations, as well as $58 million from higher service revenues, which included $30 million from the Transco expansion projects.