Natural gas producers struggling with prices that recently hit two-year lows are increasingly looking to pipeline builders for relief.
They hope projects such as the Constitution Pipeline and Atlantic Sunrise being built by Tulsa-based Williams Cos. will ease a glut of gas in Appalachia by expanding how much fuel they can deliver to profitable markets.
“The infrastructure we build is a key ingredient to bringing reliability and price stability to growing markets in the Northeast and along the Eastern seaboard,” said Ryan Savage, vice president and general manager for Williams’ northeast gathering and processing business based in Findlay.
Savage, 39, who moved to Pittsburgh after stints in energy hotspots of Tulsa, Houston and New Mexico, will talk to other industry leaders Thursday at Hart Energy’s Marcellus-Utica Midstream conference at the David L. Lawrence Convention Center, Downtown. He’ll discuss opportunities for companies connected to the acquisition of pipeline firm Access Midstream Partners.
He gave the Tribune-Review some of his thoughts on how midstream companies are responding to increased shale gas production.
Trib: Tell us about the pressure that pipeline and midstream companies face from producers and potential consumers looking to ship gas out of the basin.
Savage: The shale revolution has generated huge infrastructure demands as the appetite for natural gas continues to grow for home heating, electric-power generation and industry. Our job is building and operating pipelines that connect the best basins with the best markets, thus satisfying the needs of the producers and the consumers. Our focus is making these connections in a timely, safe and cost-effective manner.
Trib: How has that pressure increased with the recent drop in gas prices?
Savage: Our commitment to providing natural gas infrastructure remains consistent regardless of short-term fluctuations in natural gas prices. Last winter, when temperatures in New York City fell into the single digits, natural gas delivered in the city spiked to a record $123 per thousand cubic feet on the spot market. Not far away, in Pennsylvania’s Marcellus shale area, the price was about $4. This isn’t a supply problem; it’s an infrastructure problem. And that’s bad for consumers, especially during peak-demand periods in the winter. Williams is helping solve this problem with a multibillion-dollar pipeline expansion program.
Trib: What has been the largest impediment to getting pipelines built?
Savage: The biggest challenge that is outside of our control is the permitting process, which can require long periods of time in order to (certify) new projects.
Trib: Do you expect to see more midstream companies in the future, fewer, or a steady roster?
Savage: I can tell you that Williams is focused on being big — No. 1 or No. 2 in our markets. As part of this strategy, Williams last year acquired Access Midstream Partners, a midstream company with a large presence in the Marcellus and Utica. We started out in the Marcellus and Utica shales with fewer than 200 employees — today we’re at almost 1,100 people in Pennsylvania, West Virginia, New York and Ohio.