Williams signed a preliminary agreement with Sempra Infrastructure to extend the commercial reach of the company’s natural gas position, particularly in the Haynesville Shale, to international markets.
“Williams is pleased to pursue this strategic transaction with Sempra Infrastructure. We see it as an opportunity to combine our capabilities along the natural gas value chain and increase the delivery of low-carbon, affordable and reliable natural gas from the wellhead to the growing international market,” Alan Armstrong, president and CEO of Williams, commented in a Nov. 15 release.
Despite limited details so far, analysts with Tudor, Pickering, Holt & Co. (TPH) noted the non-binding heads of agreement consists of three primary components:
- A 500 MMcf/d firm sales agreement by which Williams will sell natural gas to Sempra at the Gillis interconnect for use as LNG feed gas;
- A SPA totaling 3 million tons per annum (mtpa) across Port Arthur and Cameron LNG export facilities with Williams securing FOB supplies as offtaker; and
- Formation of a joint venture (JV) to own the physical pipeline assets feeding the facilities including the existing 2.35 Bcf/d Cameron Interstate Pipeline and proposed Port Arthur Louisiana Connector.
“The Sequent marketing team is likely to be responsible for aggregating firm sales volumes, with supply sourced from a combination of WMB’s own equity volumes (GeoSouthern JV) and Louisiana Energy Gateway shippers,” TPH analyst Colton Bean wrote in a Nov. 16 research note.
“Coupling our strengths in the midstream infrastructure space will allow us to provide unrivaled access to international markets for our producing customers.”—Alan Armstrong, Williams
According to Bean, Williams will control the value chain from the wellhead to the supply-line interconnects with volumes then passing to the proposed JV before moving to the liquefaction facilities which remain under Sempra control.
“From the tailgate of the plants, WMB will market the LNG supply to international customers,” he wrote, “at present, Williams intends to minimize arb exposure by pursuing firm sales agreements linked to domestic pricing for their retained capacity while producer customers would be able to opt for a market-based netback if desired.”
Sempra is expecting to take a final investment decision (FID) to expand its Cameron LNG export plant in Louisiana and build its proposed Port Arthur LNG export plant in Texas next year.
“We are excited to continue advancing our U.S. Gulf Coast LNG and associated pipeline projects as we work to help satisfy a growing global demand for cleaner, more reliable energy sources,” Sempra Infrastructure CEO Justin Bird commented in the Williams release. “We look forward to advancing our relationship with Williams, a like-minded company that shares our commitment to building a future of energy abundance, affordability and security.”
In its release, Williams added that the proposed transactions complement the company’s recently sanctioned low-carbon Louisiana Energy Gateway (LEG) gathering project and are expected to include connections to pipelines serving Sempra Infrastructure’s LNG export facilities.
“Coupling our strengths in the midstream infrastructure space will allow us to provide unrivaled access to international markets for our producing customers,” Armstrong said pointing to the expected benefits of meeting domestic and global climate goals.
Williams’ LEG project, which is expected to go into service in late 2024, will gather 1.8 Bcf/d of natural gas produced in the Haynesville basin. Williams, through partnerships with Context Labs, Encino Environmental and Satlantis, is integrating technology solutions into the project to enable the measurement of end-to-end, verifiable and transparent emissions data to demonstrate the low carbon benefits of produced and delivered Haynesville natural gas.
The company is also exploring the enhancement of the LEG project with the addition of carbon capture and storage infrastructure that will further decarbonize the natural gas value chain.
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