Williams to pipe gas to Cheniere, Freeport LNG Texas projects

Williams Partners LP, the natural gas pipeline partnership controlled by Williams Cos., said it will deliver dry gas to liquefied natural gas export terminals being constructed by Cheniere Energy Inc. and Freeport LNG Development LP.

Williams has secured the contracts for Gulf Connector, a

475,000 dekatherm-per-day expansion of the Transco pipeline system to connect U.S. natural gas supplies with overseas markets, the Tulsa, Oklahoma-based partnership said in a statement Wednesday.

The arrangements come as U.S. LNG export projects are increasingly under pressure amid the continuing rout in global commodity prices. Liquefied natural gas from the U.S. may be priced out of Asia until 2018 and is “(extremely) borderline for supply to Europe,” Credit Suisse analysts said in a research note Feb. 5. They removed some LNG terminals from a list of possible projects, including a third train at Cheniere’s Corpus Christi, Texas, facility, saying that “very few unsanctioned projects work in the current LNG price environment.”

Gulf Connector will deliver gas for Cheniere’s Corpus Christi liquefaction project and a shipper in Freeport LNG’s liquefaction project near Freeport, Texas, Williams said.

Freeport LNG is controlled by billionaire Michael Smith.

The dry gas will be cooled to minus 256 degrees Fahrenheit (minus 160 Celsius) to shrink it to 1/600th its volume so it can be turned into LNG and shipped aboard ocean-going tankers.

Regulatory approvals are pending for Gulf Connector to add compression and make the natural gas flow bi-directional on a portion of the Transco system between Louisiana and south Texas, Williams said.

Williams also is building the Gulf Trace Project to serve Cheniere’s Sabine Pass LNG export terminal in Cameron Parish, Louisiana. The first cargo from Sabine Pass is expected to be loaded by early March. The Corpus Christi and Freeport projects are currently under construction.

Energy Transfer Equity LP, the Dallas pipeline conglomerate led by billionaire Kelcy Warren, has agreed to buy Williams Cos., which would give it control of publicly traded Williams Partners.

–With assistance from Jim Polson.

To contact the reporter on this story:

Harry R. Weber in Houston at hweber14@bloomberg.net

To contact the editors responsible for this story:

Lynn Doan at ldoan6@bloomberg.net