Williams Companies CEO, Alan Armstrong, has stated that the company is not interested in purchasing the utility companies recently acquired by Enbridge. Enbridge, a Canadian energy company, has been expanding its footprint into the utility sector. However, Armstrong believes that Williams’ current focus on natural gas infrastructure aligns better with its long-term strategy. He emphasized the importance of staying true to the company’s core business and stated that while there may be opportunities for investments, they prefer to remain dedicated to their core strengths. Williams Companies is a leader in natural gas infrastructure in the United States..
HOUSTON, Sept 6 (Reuters) – U.S. energy firm Williams Companies (WMB.N) is not interested in three utilities recently bought by Canada’s pipeline operator Enbridge (ENB.TO) as the return rate would be too low, Chief Executive Alan Armstrong said on Wednesday.
Enbridge said this week it will buy East Ohio Gas, Questar Gas, and Public Service Co of North Carolina from Dominion Energy (D.N) for $14 billion including debt, creating North America’s largest natural gas provider and doubling its gas distribution business.
“When we look at our use of equity in a transaction like that … that kind of lower return does not make much sense for us,” Armstrong said at the Barclays CEO Energy-Power Conference in New York.
The natural gas pipeline company already has high-yielding investment opportunities, Armstrong said.
Many companies are taking advantage of grant funding from the Department of Energy for electrification projects at facilities, including ports and airports. That, along with the electrification of vehicles, are expected to drive power demand, the CEO said.
“Natural gas, and in particular pipeline and storage capacity, will be the beneficiary of that continued electrification,” Armstrong said.
The shift away from coal to gas for power generation in the states where Williams operates will result in the need for an additional 4.6 billion cubic feet per day (bcf/d) of gas, he added.
Considering the volume of gas it transports and the pipeline capacity it has, and not the price of natural gas, Williams expects strong revenue growth from its existing and future projects with robust dividend yields, Armstrong said.
Front-month gas futures for October delivery fell 7.8 cents, or 3%, on Wednesday morning, to $2.504 per million British thermal units (mmBtu), putting the contract on track for its lowest close since Aug. 23.
Williams is working on increasing its pipeline network to transport even more gas to U.S. customers, including producers of liquefied natural gas, Armstrong said.
Reporting by Curtis Williams; Editing by Marianna Parraga and Bill Berkrot
Our Standards: The Thomson Reuters Trust Principles.
Williams Companies, a US energy firm, has stated that it is not interested in three utilities recently purchased by Enbridge, Canada’s pipeline operator, due to low return rates. Enbridge’s acquisition of East Ohio Gas, Questar Gas, and Public Service Co of North Carolina from Dominion Energy for $14bn will create North America’s largest natural gas provider and double its gas distribution business. Williams already has high-yielding investment opportunities and does not see the low return on equity as beneficial. The company expects strong revenue growth from its existing and future projects with robust dividend yields due to the shift away from coal to gas for power generation.
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