Slow pace of gas infrastructure buildout is 'recipe for disaster' Williams CEO

Williams Cos. President and CEO Alan Armstrong made a case for building more US natural gas infrastructure at the Reuters Global Energy Transition conference.Source: S&P Global Commodity Insights The need for new US natural gas transmission and storage capacity may be outstripping the build-out of physical assets as growing renewable power generation increases peak gas demand, Williams Cos. Inc. President and CEO Alan Armstrong warned.

The build-out of natural gas infrastructure has not kept pace with rising demand for the commodity, Armstrong said at the Reuters Global Energy Transition conference in New York City. Including exports, demand for US gas increased 56% from 2010 to 2022, according to Williams, citing data from S&P Global Commodity Insights. Meanwhile, US pipeline capacity grew 27%, and the nation's storage delivery capacity increased 12%, according to an analysis of US Energy Information Administration data by the pipeline company.

"That is a recipe for disaster if you think about how much we're leaning on this old infrastructure and not allowing ourselves to expand it because of regulatory and environmental opposition," Armstrong said at the June 7 event. "Eventually, we're going to have ourselves in a crisis."

Environmentalist groups and other critics want to reduce society's dependence on fossil fuels to mitigate climate change and prevent local impacts around energy infrastructure.

Peak gas demand rises with renewable generation

Between 2019 and 2022, wind and solar power generation capacity increased 85% in Williams' Northwest Pipeline LLC corridor and along the Transcontinental Gas Pipe Line Co. LLC system, which delivers Gulf Coast gas to the mid-Atlantic and Northeast, Armstrong said. During the same period, the company saw peak daily gas demand on Northwest Pipeline and Transco increase by 14% and 9%, respectively, he said.

"When you're in the pipeline business and the infrastructure business, you don't really care what the annual average consumption is," Armstrong said. "You have to be able to deliver on the peak days, and so when you think about ... backing up renewable power generation, you have to have a very flexible [system] and a lot of incremental capacity."

Building pipeline capacity would have the added benefit of reducing reliance on heavier hydrocarbons like fuel oil during times of peak demand in gas-constrained regions like New England, Armstrong said.

Ahead of winter 2022, Eversource Energy President, CEO and Chairman Joe Nolan and ISO New England President and CEO Gordon van Welie both implored the Biden administration to address the threat to Northeast power generation posed by the region's lack of pipeline capacity.

Midstream operators see value in storage

Armstrong's warning echoed the view of pipeline operators that have invested in expanding natural gas storage facilities. These companies bet that increasing renewable power penetration will require higher fuel volumes to supply gas-fired power plants that ramp up when wind and solar resources are not available.

In June, Kinder Morgan Inc. announced that it would expand its Markham gas storage facility in Texas, citing the need to provide capacity to serve gas-fired electric generators within the Electric Reliability Council of Texas Inc. territory.

Spire Inc. also cited the need to back up growing renewable power penetration in the Western US for its decision to green light a $195 million project to expand its Spire Storage West LLC storage facility in Wyoming. More recently, Spire has pointed to the demands placed on the US gas system by severe winter weather and the pull on domestic supplies from Europe.

Williams itself agreed to purchase Western US gas transmission and storage assets from Southwest Gas Holdings Inc. in December 2022 for $1.5 billion. Several months earlier, it acquired northern Texas gas storage and transmission operator NorTex Midstream Partners LLC in a $423 million deal.