Williams (WMB) Gets Final FERC Go-Ahead For Gateway Project

Bringing in pleasant news for the company, the Federal Energy Regulatory Commission (FERC) recently approved Williams Companies Inc.’s (NYSE:WMB) Gateway project, which is an expansion of the firm’s Transco pipeline. Notably, the Transco pipeline delivers almost half of the natural gas consumed in New York and New Jersey. With the existing Transco pipeline capacity being fully utilized, the expansion will allow additional gas volumes to be delivered to the northeastern markets.

Notably, the company had applied for the Gateway expansion project’s FERC permit in late 2017. In July 2018, FERC released its Environmental Assessment for the Gateway project, citing that it meets the requirements of the National Environmental Policy Act and the approval of the project is not likely to prove detrimental to the environment. Very recently, the FERC completed its review process and gave the final go-ahead to the project. Upon the receipt of the required regulatory approvals, the company is scheduled to commence the construction of the project in spring 2019. The Gateway expansion project is expected to come online by November 2020.

With the Gateway expansion project, Williams will be able to fulfill its commitment to supply an incremental 65,000 dekatherms per day of firm transportation capacity and the mounting natural gas needs of customers in the Northeast during the winters of 2020 to 2021. The project will help provide additional natural gas service to UGI Corporation’s (NYSE:UGI) affiliate UGI Energy Services LLC and utility firm Public Service Enterprise Group Inc.’s (NYSE:PEG) unit, PSEG Power, LLC.

Importantly, the Gateway Expansion development is expected to add 27,500 horsepower of electric motor at the New Jersey compressor station of Transco. The project also calls for the upgradation of two meter stations of Transco. The company believes that the Gateway Expansion development will provide customers with cost-effective clean energy, significantly reducing carbon dioxide emissions. The pipeline is also expected to add value to its existing energy infrastructure, which will provide it with a steady flow of revenues in the future.

Just a couple of weeks back, the company divested stakes in Texas Belle Pipeline, Purity Pipeline System and Live Oak Pipeline System for $177 million, in a bid to streamline its portfolio and concentrate on core projects. The secular shift to cleaner burning fuel for power generation and Williams’ attractive exposure to the nation's natural gas supply growth through its large-scale value creating projects bode well for the company.

The Transco pipeline system along with its expansion projects, namely Gulf Trace, Hillabee Phase 1, Dalton, New York Bay and Virginia Southside II, which became functional in 2017, poise to contribute significantly to the company’s future earnings and cash flow. Importantly, in March 2018, Williams placed into service Phase 2 of the Garden State Expansion Project, which is another notable project of the Transco pipeline. The second phase of the Garden State Expansion Project has a transportation capacity of 180,000 dekatherms of gas per day to Burlington and Mercer counties, NJ. Notably, in September 2018, Williams completed the construction of the Atlantic Sunrise project and sought the final nod from FERC.Other expansionary projects, namely North East Supply Enhancement and Gulf Connector, will keep up the cash flow momentum of Williams.

Zacks Rank and A Key Pick

Williams currently carries a Zacks Rank #3 (Hold).

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Williams Companies, Inc. (The) Price

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Written By: Zacks Investment Research