US-based Williams expands gas storage and transmission footprint in Texas with deal with NorTex

Strong points

Adds 36 billion cubic feet of gas storage and pipeline in Texas

Second midstream acquisition of 2022

US midstream operator Williams has reached a $423 million deal to buy NorTex Midstream, an operator of gas pipelines and natural gas storage assets in North Texas, from a subsidiary of Tailwater Capital, announced the company in a press release on September 8.

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With this agreement, Williams acquires 80 miles of fully contracted gas transmission pipeline and 36 billion cubic feet of natural gas storage in the Dallas-Fort Worth market in Texas.

Williams executed the agreement taking into account the demand for reliable gas-fired production in Texas, as well as the growing demand for storage services for gas produced in the Permian Basin bound for LNG export terminals on the coast. American Gulf.

“Serving one of the fastest growing population centers in the United States, this irreplaceable natural gas infrastructure is essential to bridging the gap between limited supplies and periods of peak demand, while supporting the viability of intermittent renewables like solar and wind,” said Williams President and CEO. CEO Alan Armstrong said in a Sept. 8 press release.

Demand for gas-fired generation in Texas is surging in 2022, which explains Williams’ decision to acquire gas infrastructure assets tied to approximately 4 GW of power generation. Energy consumption demand in the state has averaged 4.86 billion cubic feet/d so far in 2022, up nearly 9% from the 2021 average and a record high. all-time annual for average daily demand if sustained, according to data from Platts Analytics.

US LNG exports from a growing number of terminals on the Gulf Coast are also expected to support growth in demand for gas storage and transportation in Texas in the coming years. Feed gas deliveries to U.S. LNG terminals have averaged 11.9 bcf/d year-to-date 2022, an 11% increase over the 2021 daily average and also a new annual record for average daily demand if it holds, according to data from Platts Analytics.

Expanding Footprint

Williams’ NorTex deal is expected to strengthen its positioning among Permian Basin gas producers and Gulf Coast LNG demand centers. NorTex Midstream’s largest storage asset is the Worsham-Steed Gas Storage Facility in Jack County, Texas, which connects to the 450 MMcf/d Worsham-Steed Gas Transmission Pipeline going to south to the hub of Tolar in Hood County, Texas. The Tolar Hub connects to five intrastate pipelines in Texas with more than 2 billion cubic feet per day of pipeline transportation capacity, according to previous communications from NorTex.

Williams has already made some progress in positioning itself as a bridge between major gas-producing areas and Gulf Coast LNG markets.

At the end of June, the intermediate player authorized the final investment decision on its Louisiana Energy Gateway project, which will gather 1.8 Gcf/d of natural gas produced in the Haynesville basin for delivery to LNG export points along Gulf Coast and other sources of demand in the region when it comes on stream in 2024. In March, Williams announced a $950 million deal to acquire gas gathering and processing operator Trace Midstream. in Haynesville which will complete the Louisiana Energy Gateway project.

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