Williams to Boost Natural Gas Capacity With 12 New Projects

The Williams Companies, Inc. WMB is on an ambitious path to expand its natural gas infrastructure with the addition of 12 projects representing approximately 4.2 billion cubic feet per day (bcfd) of capacity from 2024 to 2027. This announcement was made by CEO Alan Armstrong at the Barclays CEO Energy-Power Conference on Wednesday, according to Reuters.

This latest expansion follows the Tulsa, OK-based leading oil and gas storage and transportation company's successful completion of 17 projects, which collectively contributed about 5 bcfd, between 2018 and 2023. These projects are aimed at boosting natural gas supply, especially as demand for energy increases across various sectors.

WMB's Upcoming Projects: 2024-2027

The company's growth plan for the next few years focuses heavily on critical projects such as the Louisiana Energy Gateway and Southeast Supply Enhancement pipelines. These two high-capacity projects are expected to bring substantial additional supply into the U.S. natural gas market.

One of the flagship projects in this expansion is the Louisiana Energy Gateway, a pipeline designed to deliver 1.8 bcfd of natural gas. This project is currently under construction and expected to begin service in the second half of 2025. The project will play a crucial role in increasing gas supply from regions with abundant natural resources to areas where demand is surging.

This gateway not only addresses current energy needs but also lays the groundwork for future demand in domestic and international markets, with a particular focus on liquefied natural gas ("LNG") exports.

Another key project is the Southeast Supply Enhancement pipeline, designed to deliver 1.6 bcfd of natural gas. This pipeline is currently under development and expected to be operational by the fourth quarter of 2027. The $1.45 billion investment will help to meet the rising energy needs in the Mid-Atlantic and Southeastern U.S. regions, with the increasing demand for electricity generation from data centers and artificial intelligence applications.

WMB anticipates this project to play a critical role in replacing retiring coal-fired power plants with natural gas as the go-to fuel for electricity generation. With the focus on decarbonization and the transition to cleaner energy sources, the demand for natural gas is set to remain robust in the next decade.

WMB's Historical Project Success: 2018-2023 Expansion

Between 2018 and 2023, Williams brought 17 projects online, adding a total of 5 bcfd of capacity. This growth reflects the company's commitment to meeting U.S. energy demands, driven by the shift from coal to natural gas for electricity and increasing LNG export needs. Natural gas is supporting the U.S. power grid's decarbonization efforts as less efficient coal plants are phased out.

Pipeline Projects of Williams

Williams plans to introduce approximately 11.5 bcfd of capacity between 2026 and 2032, with a $10.2 billion capital expenditure. These projects will support industrial and power generation needs and enhance LNG export capabilities. Strategic project locations will ensure a steady gas supply for domestic and international markets.

WMB's M&A Strategy and Focus

On the mergers and acquisitions (M&A) front, WMB has taken a cautious approach in recent years. According to Armstrong, the company's recent M&A activity has been focused on acquiring gas storage assets, which align with WMB's long-term strategic goals. Beyond gas storage, Armstrong expressed skepticism about other potential acquisitions, noting that the company has yet to find any attractive opportunities for bolt-on acquisitions that offer significant synergies.

This cautious approach highlights Williams' focus on making strategic investments that enhance its existing asset base. However, WMB denied reports that it had made a buyout offer to Targa Resources Corp. TRGP, a Houston-based oil and gas storage and transportation company.

In conclusion, WMB is positioned as a key player in the U.S. energy transition, leveraging natural gas to support a cleaner energy future. With an extensive pipeline of projects and a focus on gas storage, the company is prepared to meet rising energy demands and contribute to a lower-carbon future.

Zacks Rank and Key Picks

Currently, WMB and TRGP each have a Zacks Rank #3 (Hold).

Investors interested in the energy sector might look at some better-ranked stocks like MPLX LP MPLX, sporting a Zacks Rank #1 (Strong Buy) and VAALCO Energy, Inc. EGY, carrying a Zacks Rank #2 (Buy), at present.

Findlay, OH-based MPLX LP is valued at $43.3 billion. In the past year, its shares have risen 21.3%. MPLX owns and operates midstream energy infrastructure and logistics assets in the United States. It operates under two segments, namely Logistics and Storage, and Gathering and Processing.