Williams (NYSE: WMB), a leading player in the energy sector, has made a strategic move by acquiring a portfolio of natural gas storage assets from an affiliate of Hartree Partners LP. The transaction, valued at $1.95 billion, marks a significant investment in the Gulf Coast region’s natural gas infrastructure.

High-Capacity Storage Portfolio Acquired

The acquisition includes six underground natural gas storage facilities in Louisiana and Mississippi, offering a total capacity of 115 billion cubic feet (Bcf). This addition to Williams’ portfolio is not just about capacity; it’s about strategic positioning. These facilities are highly contracted with a diverse customer base, including investment-grade utilities, interstate pipelines, LNG terminals, and natural gas marketers.

Strategic Location for Growing LNG and Power Demand

The assets are strategically located to capitalize on the increasing demand for liquefied natural gas (LNG) and power generation. Williams’ President and CEO, Alan Armstrong, highlighted the acquisition’s fit within their strategy to serve growing LNG exports and power generation demand. The storage facilities, including four salt domes and two depleted reservoirs, boast high injection and withdrawal capacities, making them among the most capable in the U.S.

Transaction Details and Expected Growth

Set to close in January 2024, the acquisition also includes 230 miles of gas transmission pipeline and 30 pipeline interconnects, offering direct access to lucrative markets and key connections like the Transco pipeline. This investment is expected to generate significant earnings growth, leveraging the strong fundamentals of LNG and power demand.

Advisors and Legal Counsel

The transaction was facilitated by BofA Securities as the financial advisor and Davis Polk & Wardwell LLP as the legal advisor for Williams. Hartree’s advisors included Evercore and Wells Fargo Securities, with Milbank LLP as legal counsel.

Conclusion: A Forward-Looking Move by Williams

This acquisition by Williams represents a forward-looking strategy in the energy sector, positioning the company to capitalize on the growing demand for natural gas, particularly in the context of LNG exports and electrification trends. The strategic location of these assets, combined with their high capacity and connectivity to major pipelines, places Williams at the forefront of meeting the evolving energy needs of the U.S. and beyond.

  Alan Armstrong, Hartree Partners, natural gas, USA, Williams