Expansion of wind and solar energy in the United States is driving up the value of natural gas pipeline capacity because of the call on power generation for peaking demand, according to Williams CEO Alan Armstrong.
While renewables have been the fastest growing source of power capacity in recent years, electricity generated by natural gas plants “has actually been growing at a little faster clip…over the last three years than the actual generation for solar and wind,” Armstrong said at the Barclays CEO Energy-Power Conference.
Tulsa-based Williams’ pipeline network handles about one-third of the nation’s natural gas.
Armstrong explained that the more wind and solar plants come online, the more gas pipeline capacity “we are selling because people know they’re going to have to back up those intermittent resources.”
If wind and solar utilization rates were to remain around current levels and the forecast growth in renewable capacity comes to fruition, then the gap between nameplate and available firm capacity will only get bigger, Armstrong said. “And that really is where there is going to be a big opportunity…not on an annual average basis for natural gas, but on a peaking level.”
The bigger the gap between firm and total installed resources, “the more peaking there’s got to be, and that means more pipeline capacity sales, because it really doesn’t do any good to put in a generation facility…and not have the pipeline capacity bought with it,” the CEO said.
Renewables growth is not the only bullish trend for Williams’ business, according to Armstrong, who cited rising demand for gas to power data centers and artificial intelligence (AI).
“Obviously, everybody likes to talk about data centers and AI,” he said. “I can tell you we have our hands very full right now trying to keep up with the number of opportunities that are coming at us…
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“We have three major projects that we’re developing right now in Virginia, Texas and Wyoming.” Another developer in Utah is permitted for a 300 MW gas-fired facility “that would be driving demand on our Mountain West system.”
Williams also is “very fortunate” to have laid extensive fiber optic bundles alongside its pipeline network when the firm was in the telecommunications business, Armstrong said. “And so, though we don’t own that business today, our facilities and our pipelines happen to be co-located with some of the bigger fiber optic networks here in the U.S., so we really are in a prime position right now.”
In addition to its extensive pipeline network, Williams assets include 405 Bcf of natural gas storage capacity.
“We’ve been really going after the storage business,” Armstrong said. “Most of our storage is in these areas where LNG exports are going to be, because we think storage is going to be absolutely critical to both backing up renewables” and supporting liquefied natural gas exports. Armstrong explained that, “as we start to build out the fleet of LNG exports here in the U.S., we believe the utilization is not going to be sitting at 100%. It’ll be coming off of that, and when you have that you’re going to put a lot of demand on both fast injection storage and storage that’s…close to where it can serve those facilities.”
Meanwhile, Armstrong said, about one-third of the United States’ remaining coal-fired power fleet is within the Williams footprint, “and that equates to about 9.8 Bcf/d” of potential demand growth if gas continues to displace coal in the power sector.
