PITTSBURGH—The Northeast region is projected to account for as much as 75% of the growth in the U.S. supply of natural gas supply through 2022, and The Williams Cos. is “poised for growth,” said Jim Scheel, Williams’ vice president for Northeast gathering and processing, at Hart Energy’s recent Marcellus-Utica Midstream Conference.

Williams (NYSE: WMB) has built up its gathering and processing footprint in the region over the last eight years, he noted, with the “limiting factor” of late being the region’s lack of adequate takeaway capacity, he said.

“What’s really been the limiting factor has been takeaway capacity,” observed Scheel. “We need more takeaway to unlock the value in the Northeast, and that would really position us for growth.”

Williams is currently focusing on adding takeaway capacity via its Atlantic Sunrise project, the largest expansion of its Transco system. The 187-mile project will add 1.7 billion cubic feet per day (Bcf/d) to the Transco system and better connect Marcellus gas production from northeast Pennsylvania to Mid-Atlantic and Southeast markets in the U.S. The project is scheduled to be in-service in mid-2018.

Currently, dry gas production for Williams in northeast Pennsylvania is concentrated in Bradford and Susquehanna counties. Output is running at about 5.7 Bcf/d and “rapidly growing as we see producers expand in that area,” he noted. “It’s really going to take off as we see the Atlantic Sunrise project come on,” he said. “That particular acreage position is in some of the best rock in the country.”

In addition, Scheel noted that, to the south and west, Williams also has a “tremendous position” covering three areas. The Ohio River Supply Hub has long-term contracts in the liquids-rich Marcellus and dry Utica, while the Utica Supply Hub has acreage dedications in both liquids-rich and dry windows of the Utica. Williams also has an ownership interest in Blue Racer Midstream, he added.

Scheel described his customer base as having become not only “much more consolidated and more well-capitalized” over time, but also bringing on wells that are leaping ahead in terms of productivity.

“The productive capability coming out of these producers is amazing,” commented Scheel. “What’s coming out of these wells is just fantastic. And costs just keep coming down,” he continued. “These producers are able to make money in a $3/Mcf gas environment and even a sub-$3 gas environment.”

Scheel cited data from Wood Mackenzie showing its recent long-term gas forecast. He pointed to a forecast that natural gas production from the Northeast region would grow from 24.3 Bcf/d in 2017 to 41.6 Bcf/d in 2022. The increase of 17.3 Bcf/d is projected to account for roughly 75% of overall growth in the U.S. over that period, according to Wood MacKenzie.

“The growth is coming from the Northeast, and we have to be prepared to address that,” said Scheel.

Whereas much of the production growth over the last five years has been in the Bradford sub-play, other areas will increase in importance, Scheel said. For example, while the Bradford sub-play in the Marcellus is still expected to grow by 2 Bcf/d over the next five years to 5.6 Bcf/d, the Utica core lean gas sub-play is projected to grow the most, by 3 Bcf/d to 5.9 Bcf/d, followed by Marcellus southwest rich gas, growing by 2.5 Bcf/d to 4.1 Bcf/d.

This more varied growth in production will reflect the areas with more takeaway capacity, higher oil prices having a positive impact on NGL prices in general, and regional demand for NGL, such as from investments in the petchemical industry, according to Scheel. In particular, Marcellus southwest rich gas and Greene County dry gas would be advantaged, he said.

As production rises to 41.6 Bcf/d in 2022, Scheel said he was “routing for every takeaway project, Williams or not,” in order to get gas to the “very best markets.”

Currently, Williams has roughly a one-third share of the Northeast market, he said, and was looking to benefit from its share of gathering and processing volumes as new infrastructure comes into service to take gas out of the basin. Scheel cited a Wood Mackenzie forecast calling for some 22 bcf/d of capacity to come into service in 2018-2022, both intra-region and takeaway capacity out of the basin.

Chris Sheehan can be reached at csheehan@hartenergy.com.