Williams Companies explores gas-producing assets to secure AI energy supply for hyperscalers

Exclusive: Williams weighs buying gas-producing assets to enhance AI energy supply to hyperscalers, sources say

NEW YORK, Feb 6 (Reuters) - Williams Companies (WMB.N), opens new tab is exploring buying natural gas production in the United States, a rare foray for an energy infrastructure operator, as it aims to secure natural gas supplies to support its one-stop-shop offering to hyperscalers and data center clients, three people familiar with the matter said. The Tulsa, Oklahoma-based firm has spent the last year positioning itself as a leader in providing energy to companies building out artificial intelligence infrastructure, supplementing its traditional pipeline business with new power generation capabilities. Williams is now searching for upstream assets that would allow it to pitch itself as a single energy partner to hyperscalers, the sources said, giving it a competitive advantage in courting digital infrastructure operators that would otherwise need to negotiate with multiple parties. The sources cautioned there was no guarantee that the company would move forward with the plan, and also spoke on condition of anonymity to discuss confidential deliberations. In a statement, Williams said it "continuously evaluates opportunities that align with and advance our natural gas-focused strategy", but declined to comment further. The company is due to report its fourth-quarter earnings, as well as host its 2026 analyst day, on Tuesday. AI POWER NEEDS Securing the necessary power to support data centers has become one of the biggest challenges for hyperscalers and other developers of AI infrastructure. As well as needing huge amounts of consistent electricity, data centers are placing stress on a grid experiencing demand growth for the first time in two decades. Power providers are struggling to keep up, with existing generation affected by weather extremes and new projects stymied by local opposition and wait times for key power-plant components. Williams has put power generation at the heart of its strategic planning. Its $2 billion Socrates project in Ohio, due online in the second half of this year, has Meta Platforms (META.O), opens new tab buying the 440 megawatts of power it is due to generate. On October 1, Williams disclosed plans for two further power projects in Ohio, called Apollo and Aquila, backed by 10-year power purchase agreements with an unnamed party. Williams anticipates spending around $3.1 billion on these two projects, with both due online in the first half of 2027. Adding power projects to its existing infrastructure, which includes around 33,000 miles of pipelines carrying predominantly natural gas and associated storage assets, is expected to bolster its earnings in coming years. Williams' current target is to grow earnings before interest, taxes, depreciation and amortization (EBITDA) by between 5% and 7% annually. Analysts at UBS said in a February 4 note that they were watching to see whether Williams will increase this target to more than 7% compounded annual growth through 2030 at next week's analyst day. INTEGRATED ENERGY An integrated model, in which a U.S. oil and gas company would own a combination of production, storage, transportation and refining assets had been commonplace. However, the industry moved to favor specialization in the early part of the 21st century and most companies - outside of giants such as Exxon Mobil (XOM.N), opens new tab and Chevron (CVX.N), opens new tab - divested their non-preferred components. Williams spun off most of its upstream business into WPX Energy at the start of 2012. WPX remained independent until the beginning of 2021, when it completed a $12 billion merger with Devon Energy (DVN.N), opens new tab. Williams has possessed other small production assets, often tied to joint ventures or part of its midstream footprint, but these have also been offloaded over time - its stake in a Haynesville shale basin joint venture with GEP Haynesville II, for example, was agreed in October to be sold to Japan's JERA for a total consideration of $1.5 billion. Reporting by David French and Shariq Khan in New York; Editing by Nia Williams Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Energy * Grid & Infrastructure * Exploration & Production * Pipelines & Transport * Gas Shariq Khan Thomson Reuters Shariq is a New York-based energy reporter and has led coverage of the destruction caused in the oil patch by the coronavirus pandemic, the industry's rebuilding efforts, and the upheaval of trade routes from Russia's invasion of Ukraine, among other major developments.

Williams weighs buying gas-producing assets to enhance AI energy supply to hyperscalers, sources say

NEW YORK, Feb 6 (Reuters) - Williams Companies is exploring buying natural gas production in the United States, a rare foray for an energy infrastructure operator, as it aims to secure natural gas supplies to support its one-stop-shop offering to hyperscalers and data center clients, three people familiar with the matter said. The Tulsa, Oklahoma-based firm has spent the last year positioning itself as a leader in providing energy to companies building out artificial intelligence infrastructure, supplementing its traditional pipeline business with new power generation capabilities. Williams is now searching for upstream assets that would allow it to pitch itself as a single energy partner to hyperscalers, the sources said, giving it a competitive advantage in courting digital infrastructure operators that would otherwise need to negotiate with multiple parties. The sources cautioned there was no guarantee that the company would move forward with the plan, and also spoke on condition of anonymity to discuss confidential deliberations. In a statement, Williams said it "continuously evaluates opportunities that align with and advance our natural gas-focused strategy", but declined to comment further. The company is due to report its fourth-quarter earnings, as well as host its 2026 analyst day, on Tuesday. AI POWER NEEDS Securing the necessary power to support data centers has become one of the biggest challenges for hyperscalers and other developers of AI infrastructure. As well as needing huge amounts of consistent electricity, data centers are placing stress on a grid experiencing demand growth for the first time in two decades. Power providers are struggling to keep up, with existing generation affected by weather extremes and new projects stymied by local opposition and wait times for key power-plant components. Williams has put power generation at the heart of its strategic planning. Its $2 billion Socrates project in Ohio, due online in the second half of this year, has Meta Platforms buying the 440 megawatts of power it is due to generate. On October 1, Williams disclosed plans for two further power projects in Ohio, called Apollo and Aquila, backed by 10-year power purchase agreements with an unnamed party. Williams anticipates spending around $3.1 billion on these two projects, with both due online in the first half of 2027. Adding power projects to its existing infrastructure, which includes around 33,000 miles of pipelines carrying predominantly natural gas and associated storage assets, is expected to bolster its earnings in coming years. Williams' current target is to grow earnings before interest, taxes, depreciation and amortization (EBITDA) by between 5% and 7% annually. Analysts at UBS said in a February 4 note that they were watching to see whether Williams will increase this target to more than 7% compounded annual growth through 2030 at next week's analyst day. INTEGRATED ENERGY An integrated model, in which a U.S. oil and gas company would own a combination of production, storage, transportation and refining assets had been commonplace. However, the industry moved to favor specialization in the early part of the 21st century and most companies - outside of giants such as Exxon Mobil and Chevron - divested their non-preferred components. Williams spun off most of its upstream business into WPX Energy at the start of 2012. WPX remained independent until the beginning of 2021, when it completed a $12 billion merger with Devon Energy. Williams has possessed other small production assets, often tied to joint ventures or part of its midstream footprint, but these have also been offloaded over time - its stake in a Haynesville shale basin joint venture with GEP Haynesville II, for example, was agreed in October to be sold to Japan's JERA for a total consideration of $1.5 billion. (Reporting by David French and Shariq Khan in New York; Editing by Nia Williams)