Tulsa-based Williams Partners this week completed a big upgrade to its Transco Pipeline in a move that has strong implications for all natural gas producers.
The Transco line is about 10,200 miles long, stretching from the Texas Gulf Coast to Pennsylvania, New York and New Jersey. The line touches or crosses 14 states as it moves 9.9 billion cubic feet of natural gas per day.
This week's upgrade adds a capacity of about 130 million cubic feet per day to spots in North Carolina, Alabama and Georgia, which mostly will be used to supply natural gas-fired power plants.
Williams Partners executives praised the project as a boost for the partnership.
“This expansion represents another milestone in our build-out of Transco, the nation's largest gas pipeline system and a significant platform for growth,” said Rory Miller, Williams Partners' senior vice president of the Atlantic Gulf region.
“We're executing on more than $1.5 billion in additional Transco expansion projects primarily to create efficient access between the prolific natural gas production areas in the Northeast U.S. to growing demand centers in numerous Southeast and Atlantic Seaboard states.”
While the project is good news for the Tulsa-based pipeline company, it's also welcome news for natural gas producers throughout Oklahoma and the country.
Activist investors over the past year have targeted energy companies throughout the country, blaming executives and directors for not doing enough to drive up stock prices.
Some of the shareholders have laid out clear claims of wrongdoing. Others have simply complained the stock price is too low.
In any case, a big barrier to driving up the stock price is simple supply-and-demand economics. As domestic producers learned how to produce natural gas from shale and other dense rock, they flooded the market, far outpacing demand.
Low natural gas prices over the past five years have begun to change that. Producers have switched their focus to oil while chemical companies have begun building new plants and expanding existing facilities to take advantage of low prices. At the same time, electric utilities are adding or favoring natural gas over coal, which carries with it more environmental concerns.
Natural gas pipelines are key to continued demand growth.
Without expanded pipeline capacity, new and expanded plants would be unable to use the abundant natural gas that has been unlocked throughout the country.