Williams Surveying Storm's Impact on Operations

Officials for Williams are in the process of inspecting its primary operations in the Gulf of Mexico in the aftermath of Hurricane Ivan.

The company is reporting increased volumes of natural gas today on its wholly-owned Transco system, after experiencing deeper production cuts earlier in the week. Williams' 50-percent owned Gulfstream pipeline expects reduced levels of throughput continuing into this weekend.

On the two pipelines, Williams on Friday is seeing a combined supply reduction of approximately 1.1 billion cubic feet, compared with reductions of almost 2 billion cubic feet on Wednesday. Together, the pipelines have the capacity to transport approximately 9 billion cubic feet of natural gas per day. Despite the cuts, both pipelines have met customer commitments, accessing supplies in storage where necessary.

The reduction in transportation volumes on the pipelines is not expected to have a significant impact on Gas Pipeline revenue in the third quarter because of the rate structures on each system.

In Alabama, the company's gas-processing plant located onshore in Mobile survived the storm without incident. The plant can process approximately 600 million cubic feet per day of natural gas. Since the primary source of inlet gas for the plant comes from offshore wells, the plant's level of utilization will be negatively impacted to the extent that its customers are unable to resume production.

Offshore, the company's newest asset in the Gulf -- a deepwater spar platform built to serve producers in the Devils Tower field at Mississippi Canyon block 773 -- did sustain damage during the storm. The platform and topsides are in place, although repairs will be required.

A more detailed inspection at the Devils Tower platform is planned for this weekend. Based on initial estimates, the platform will be out of service through next week, and possibly longer. Events at Devils Tower are not expected to have a significant impact on Midstream revenue in the third quarter.

Also offshore, Williams has confirmed a favorable visual inspection of its Canyon Station asset -- a fixed-leg platform in 300 feet of water in East Main Pass Block 261 in Mobile Bay. Further inspection will be required to assess the subsea infrastructure that supports the platform. For now, it appears that Canyon Station can return to operations as its producer customers restore production into the platform.

The company has placed its insurers on notice regarding the potential effects of Hurricane Ivan.