Williams CEO talks gas, regs in Harrisburg interview
Alan S. Armstrong sees a great deal of potential in and under Pennsylvania.
Armstrong is president and CEO of The Williams Companies Inc., the Oklahoma-based energy company behind the Atlantic Sunrise pipeline, which will cross Pennsylvania from Susquehanna County to Lancaster County.
During a visit to Pennsylvania, Armstrong sat down for an exclusive interview with the Business Journal on Wednesday. Excerpts from that interview follow below. An expanded version will be published in an upcoming print edition.
In his conversation, Armstrong talked about the promise of shale gas energy for his company and for Pennsylvania. He also discussed where the $3 billion Atlantic Sunrise pipeline, which has drawn opposition from Lancaster residents, fits into the company's business plan.
Atlantic Sunrise, a project of Williams Partners LP, will link up in Lancaster County with the existing Transco Pipeline, which carries gas between the Gulf Coast and the Eastern Seaboard. The new line is designed to carry gas from the Marcellus Shale fields to major markets along the Eastern Seaboard, by way of the Transco line.
Federal approval was granted earlier this year, but Williams is still awaiting final state approvals, a subject Armstrong also discussed.
Q: Tell us about your company, and the importance of this project.
A: At Williams we gather a little over 30 percent of the nation’s gas and handle it, including through long-haul transportation. So we know natural gas pretty well. It’s the core of our business. And the resource base that Pennsylvania is blessed with is not just the lowest cost in the U.S. In terms of basins that have access to markets, it is absolutely the lowest cost in the world.
So, what an opportunity Pennsylvania has to really build its economy around natural gas. Obviously, getting pipelines built and getting the gas to market is key to that. We recognize that the pipeline issue is both new and old to Pennsylvania. The amount of pipelines that are already in Lancaster County, for instance, would probably impress everybody. We’ve had pipelines here for 40-some years with Williams.
You operate the Transco Pipeline, for example.
Its main business before was transporting gas out of the Gulf of Mexico to our primary markets along the Eastern seaboard, including Philadelphia, Baltimore, D.C., Atlanta, all of the Carolinas and New York City. In fact, we’re the largest supplier to New York City by a fair margin. So we’ve had pipelines in the eastern part of the state for a lot of years, and we have a big system that goes over to the Leidy (gas) storage in the central part of the state as well.
So Pennsylvania and pipelines are not new, but it’s been a long time since we’ve built out major new systems. Transco, a system, that has flowed for over 50 years from the south to the north now is getting turned around, and Pennsylvania is kind of becoming the Texas that we all thought about from an energy standpoint, because it is the lowest-cost resource.
That's a major transformation, as Atlantic Sunrise will be for our state. What are some of the challenges of this process?
There is a lot of change that goes along with that - getting people comfortable with that, getting folks to understand it, and having real knowledge of it, rather than fear. We’re in an education process right now, letting people know how safely we can do and have done pipelines at Williams, and how dedicated we are to continue to do it safely and in an environmentally friendly way. We’re not looking to cut any corners.
What are your thoughts on the regulation process?
Honestly, we want tough regulation. As a large company, we’re going to do things right anyway. We don’t want there to be easy regulation. We want it tough and we want it enforced.
The challenge that exists today in this space is that there is so much jurisdictional overlap, between the feds, the states, local rights, townships, so you have multiple people giving you mutually exclusive direction on what needs to be done to get a permit, and it really winds up just wasting money that could be spent on schools, on putting the water systems in. It could be spent on a lot of good things other than going into reroutes and attorneys. Said another way: If it really was producing something, if it really was generating a safer environment, less impact on the environment, we would say great, it makes sense. But that’s really not what we are getting out of it.
Those are some of the opportunities here in Pennsylvania: To really streamline the permitting process.
If the governor and the Department of Environmental Protection were sitting here right now, what would you say to them?
First of all, Gov. Wolf has been very supportive. It’s very clear that he wants the infrastructure to be built, and he wants it to be done right, and we are completely aligned on that issue. I think the challenge, again, is that there is so much overlap in jurisdiction between the federal requirements and the state requirements.
We are into a major project like Atlantic Sunrise, that has already been through the federal permitting process, and we’ve already gotten a certificate from the Federal Energy Regulatory Commission for the project, and yet we are still pending with the state permits, which is very unusual. So I would say, "Hey, guys, let’s really streamline this process. We want to do it right."
How big of an investment does Williams have in shale gas in this region?
To date, in our total Marcellus and Utica investment, I think we have close to $8 billion invested up here. The Atlantic Sunrise project is a $3 billion project, and the majority of that is in Pennsylvania.
(Editor's note: Collectively, the Marcellus and Utica fields also cover parts of Ohio, West Virginia, Maryland and New York.)
How does Atlantic Sunrise fit into your business plan?
Transco was built to flow gas from the south to the north to feed northern markets. Our demand on that system had grown and grown. It was getting really difficult to keep up with the demand on the northern end of our system. And then lo and behold, the Marcellus Shale shows up and allows us to supply the system from the north and the south. So it really increases dramatically the capacity we have to supply the growing markets that we have along the Eastern seaboard.
What's the updated construction timetable for Atlantic Sunrise in Pennsylvania?
We’re focusing on getting final approvals to hopefully start construction in July. We’ve already started construction in all the other states. In Maryland, for example, we’ve already had those permits for quite some time.
Could you foresee a time when gas production in Pennsylvania outstrips all other states?
Easily. That’s not a stretch at all. That would probably take five or six years.
How much gas is under Pennsylvania?
There’s numbers all over the place on that question. I’d have to do the math on that for you, but I think the last number I saw was that the Marcellus and Utica together could supply U.S. demand for up to 40 years, so it’s tremendous how big this resource base is.