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WPZ to Continue Its Focus on Natural Gas Pipeline Expansion in 2018

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Williams Partners’ capital expenditure

So far in this series, we’ve looked into the capital spending and distribution growth plans for the top three US Midstream companies—Enterprise Product Partners (EPD), Kinder Morgan (KMI), and Energy Transfer Partners (ETP).

Now, we’ll perform a similar analysis for Williams Partners (WPZ), which is among the US top capital spending midstream companies.

Williams Partners’ capital expenditure increased to $2.4 billion in 2017 compared to $1.9 billion in the previous year, a YoY increase of 24.2%. The increase in William Partners’ 2017 capital expenditure was mainly due to heavy spending on its Transco expansion projects.

WPZ placed its five major Transco expansion projects into service in 2017. Moreover, the partnership implemented higher spending on maintenance last year due to damages resulting from the hurricanes.

Williams Partners’ capital spending is expected to increase further in 2018. The partnership expects to spend $2.7 billion on expansion projects by the end of this year.

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Where would WPZ spend?

Of the $2.7 billion total growth spending target, $1.7 billion is expected to be spent on the Transco expansion for 63.0% of total growth spending. Overall, the capital expenditure on its natural gas pipeline expansion would be higher, including the investments in the West segment. Investments in its Gathering and Processing business are expected to follow spending on its natural gas pipeline expansion.

Boardwalk Pipeline Partners (BWP), Spectra Energy Partners (SEP), and EQT Midstream Partners (EQM) are among the midstream companies that are bullish on the expansion of the natural gas pipeline network.

Williams Partners expects to bring its major Transco expansion project, Atlantic Sunrise, online in mid-2018. Moreover, the partnership is expecting to complete its Susquehanna supply hub expansion in the first quarter of 2018.

How WPZ plans to fund its 2018 capex

Williams Partners expects to continue funding its growth capex from internally generated cash flows in 2018 and liquidity under its credit facility. It doesn’t expect to issue public equity at Williams Partners or at the level of its GP (general partner), Williams Companies (WMB).

In the next article, we’ll look into Williams Partners’ distribution plans for 2018.

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