Yeah.

Welcome to the Aaron Harber show.

Today we are in Houston, Texas at Ceraweek by S&P global.

Welcome to the Aaron Harbor Show.

This is part one of a two part series with Alan Armstrong, the presiden and CEO of Williams Companies.

Alan thanks so much for joining me.

Aaron, how are you?

I'm good.

Hey, great having you on the show.

I know we've tried to do this for a long time.

Yeah, really excited to be here and appreciate what you do.

Well, that's kind of you.

So you've been a you've bee at Williams your entire career?

Pretty much.

So you're an engineer.

So tell me a little bit about that story because you don't see that happening much anymore.

Yeah.

No, it's very true.

Well, I would just tell you, you know, the Williams Company is a company, has been around for a long time and has very certain values as a company that tha the Williams brothers themselves kind of impacted on the company and, really, made it a place that's really easy to put your heart and soul into and feel good about what you do every day and know that, you know, your job is to, to, continue a legacy of treating people well and doing what's right.

And that makes it a really eas place to work for a long time.

Frankly.

So so, you know, I know that, you know, personally, you, you know, you have an incredible record of yo and your wife of philanthropy.

You're in huge demand as a speaker.

Talk a little bit about those two things, because I think I know philanthropy is a big part of your life.

Yeah, sure.

You know, we, you know you get to a point in your life where you think, wow, this is this is amazing guy from, you know, Bartlesville, Oklahoma.

You know, granddad was a rancher and, winds up with money in their pocket and and you really, I think, start to think about how you can give bac and do good in the world.

And, you know, so that's a special opportunit that I don't take for granted, frankly, that, and worst thing I'd want to do is waste that, and not put it to good use.

So it actually, as you know, it actually takes work to make sure that the money is put to good use and it actually and you're actually being a good steward of the fund that you're so blessed to have.

So that's how I think about philanthropy.

And, and and we actually hav our kids involved in it as well, which I really am excited about.

In fact I went to an event this weekend that my second daughter chaired, and I was so proud of her for that.

You know, they set a record and I was really excited to see the kids kind o taking the torch on that front.

So it's pretty exciting.

But I'm very involve in education and particularly, education for underprivileged because I've seen what a huge impact that can have on kids that don't have the benefit of somebody like myself had that had, you know, parent that were that were in business and all of tha was kind of second nature to me.

You realize, you know, I alway kind of took that for granted.

But when you're actually working in these nonprofits, particularly Junior Achievement is one that I just came off being the chair for Junior Achievement and an organization called Treaty E, which is, started in Atlanta as an, as a branch of Junior Achievement.

But incredible work that they've done going int very disadvantaged high schools and turning them aroun by introducing kids to the fact because a lot of kids go to school, they don't even know what they're learning or why they're learning it.

They're just, you know, they're just kind of crammed at home and they don't have any idea what, why they're learning.

But so so these programs have brought businesses into the school to say, here's why you're learning this, that this is a problem that we need you to solve.

There's a business problem.

And then in the afternoons, they learn the practical, math and skills that they need to help solve that problem.

All of a sudden, it's relevant why they're learning it.

And that's so powerful.

And so things like that, that really can help peopl that are willing to work hard, and put their back into it give them an opportunity to step up, I think is, you know, just fantastic work and very proud to be associated with.

Oh, that's that's great to talk a little bit about the company because, I think, you know, the company plays a huge role in the energy industry, when it comes to natural gas.

I mean, you have huge responsibilities.

But at the same time, because, pipelines are underground, right?

Most people don't know anything about the company.

Yeah.

You know, so Williams is like, is 118 year old company.

We operate we handle a third of the nation's natural gas or pipeline systems.

We serve all up and down the eastern seaboard into New York City, all the way down through Florida and on the West Coast.

We serve, all the big cities in the northwest.

So Portland and Seattle and in a lot of places in between, obviously, so very fortunate to have some some of the big the biggest pipeline in the nation is Transco pipeline that we own.

Very important pipeline.

The thing about pipelines that people don't appreciate is that how much good it does for our economy, and how much value there is in having reliable and reliable energy source to somebody.

You know, I, I raised this recentl in a business council meeting.

I asked somebody, raise your hand if you've ever had the gas service go off to your house and nobody raised their nobody.

And really, that's pretty remarkable if you think about it.

People are unfortunately getting more and more accustome to brownouts and power outages.

But but the reliability of our natural gas systems is pretty remarkable.

That's the good news.

The bad news is, because of that, people take it for granted.

And and it allows people to say, I don't want we don't want a pipeline built into the earth.

We don't want new capacity.

Because they'v never experienced the situation when they don't have it right now.

Not, you know, in terms of pipelines and not in the kitchen, of natural gas, but certainly there are, extraordinary number of protests against pipelines, oil related pipelines.

And, what I've had trouble understanding is, if you look at these, the safety of pipelines and in this case for oil, right, versus trucking oil or versus rail.

But yeah, you know, carrying it by rail, it's night and day.

So what what is missing there in terms of I mean, I'm an environmentalist, right.

And there's an environmental with I want this stuf to be transported by pipeline.

Right.

I don't want trucks.

Right.

And trains got less energy required as well.

So I'll let let's associate why the disconnect?

I you know I think it is.

Here's the deal.

If you remember the movement years ago around the anti fossil fuel movement, the first move was to attack fracking.

And and so that tha became a big motive to do that.

They realized that they were up against people that own private land.

And those private landowners who like I actually want them to frack on my land.

Don't tell me what I want I actually want this to be done.

They're doing it safely.

And the technology that has been invented here in the U.S. is just amazing contribution.

So but they tried to stop that.

They were unsuccessful, but then they realized, well, wow, you know, we got this linear item that has to be publicly permitted and you can have 1,000,000ft.

And if you don't have the last foot of right away, that pipeline is worthless.

Right.

And so that's the that the ability to block fossil fuels by blocking pipelines is what's become.

And you know, I'm okay with everybody havin their opinion on these issues.

But it's not very frank.

Frankly, it's not very genuin to say I don't want the pipeline because of it's going to cause damage to the installation of the pipeline.

And the operation of the pipeline is going to cause damage.

That that is absolutely not the case, but it is.

It's actually the arguments been around stopping fossil fuels, and that's the real motive behind it.

And so bottom line, it's it's a been a very effective tool of raising prices to consumer and lowering cost to producers when you can caus a bottleneck on infrastructure because you don't have enough capacity to get the product to the market.

And so it's been a pretty, you know, powerful tool by the environmental opposition to stop pipelines.

So what about in terms of, you know, advances in leak detection, pipeline safety you know, in your your career, what have you seen, you know, fro from when you started to today?

Because it seems to be an order of magnitude difference.

Yeah, absolutely.

I mean the, the, the progress that we've made on being able to do internal inspection on our pipelines, taking you can imagin the amount of data that we have from running internal inspection on every micro element of pipeline from the internals.

In fact, I remember probably about ten, 15 years ago, Stanford University contacted us and said, do you guys realize you're one of the largest data stores of any private company because of the amount of data that we store that shows u the condition of our pipelines?

And so you actually scan the pipelines.

There's a lot of different ways that those tools work, but we look for any anomaly.

So if a if the pipeline is healthy, if the wall thickness is the same, if there's not an cracks in it, it looks one way.

If there's any crack or any pitting or any anomaly, any stress fracture in the pipeline, then this internal inspection will pick it up.

But you have to look at very microscopic viewpoint of every bit of the thousands and thousands of miles of pipeline that you have.

So so it winds up being a lot of data.

But, ma'am, have we come so far on that in terms of being able to keep our pipeline safe and in fact, one of the biggest issues we have is being able to very quickly process that information, because the data is very dens and it takes a lot of analysis.

AI is a very powerful tool now actually, to be able for us to be able to preemptively know where our problems are going to be, because we're starting to connect where those where those defects in the pipeline are with soil conditions, with, stress in the pipe land movement in the area that will cause stress in the pipeline.

So I'm really I mean, we were already safe, but we are technologies allowing u to to really step our game up.

Right.

Well, and also especially with AI, your predictive ability, right, is exceptional as a I mean, 30 years ago you were guessing right.

And and today you're projecting.

Yeah.

Yeah.

We were dependent on a guy that it had 40 years of experience and his, you know, intelligence that had been built up almost empirically, from watching where we had had problems relative where we would find problems.

And now we can take that and not just apply it to our data set in our pipelines, but we can take the whole industry knowledge about where those problems have occurred and apply that.

So we're we're really making big advances here.

So certainly what's going one of the things that's really fascinating, what's going on in the country, is how the demand for energy is actually going up.

Per capita has gone down.

Certainly if you look at manufacturing on a per unit basis, more efficiency.

But overall now you have thi new element in the last really, you know, decade or so, which is now exploding.

And that's data centers, right?

What's the role of natural ga when it comes to data centers.

Yeah.

So if you think about today what today's data centers are looking for, one, they're looking for very high reliability.

And it's got to be on 24 over seven.

And two, they they definitely need to get it installed quickly because we are very much in a race against the rest of the world in terms of getting our AI capabilities built out, and the demand is growing very, very rapidly.

I've been shocked.

It's been an exciting year and a half from my perspective to really dig in and learn more and more about what's driving AI and driving that demand.

But it is, that demand really can only be me practically here in the US today as we sit her in terms of meeting that speed and meeting that reliability with gas fired generation.

And so that is that is what is driving a tremendous amount of load on our system.

A couple of fascinating facts here just this winter.

And by the way, this wasn't an extreme winter by from what we measure is heating degree days.

So that's the amount of degree above normal on a daily basis.

And that's what we measure as a, as a form of predicting load and measuring load on our systems.

This was not any, I think we were 4% beyond normal which is not very much at all.

In, so far this winter, we hit 18 of the to 20 peak days ever on our system.

This winter, in which which is really remarkable.

And in January January load alone on our Transco system was 10% above the highest January we've ever seen on our system ever before.

So loads are picking up dramatically.

And it's really the convergence of not only the heating load on our systems.

And those are remaining, you know, fairly steady people like natural gas because it's much lower cost and electricity or fuel oil.

So we do see growth in the residential demand for natural gas.

But what's really picked up is the data cente demand is really picked up, in.

And now we're seeing a pretty big pickup, and we're going to see over the next three years in LNG demand as well.

So a lot of incremental demand, the rest of the world has figured out that gas is extremely cheap.

And, and we're cleaner than any other fuels we have available to, to have dispatchable power.

So, so it's a it's a big I mean, the I think it's sneaking up on people how fas this, demand load is coming on.

What about the you know, there's certainly a movement in certain circles to ban the use of natural gas for residential heating, for cooking, etc.. Where is that going?

Yeah, you know we've seen that in a few areas.

It actually, you know there was an attempt to do that in the, in Washington state this last year and during the, the November elections that got overturned, which we were glad to see.

But we are seeing that in certain locations, and it's such a poorly informed decision because if you look in most of these markets, the alternative to tha is either going to be fuel oil or electric heating.

And if people realize that they'll if you're lucky from an emission standpoint, if you're lucky, the majority of that is comin from natural gas and not coal.

But if it's coal, you really are not making any progress on on reducing emissions.

People want to think they are, and that's great.

I appreciate everybody's motive and good intention on that front.

But but the facts are all we're doing is putting more and more load on the systems.

And the only wa we're keeping up with that load is adding gas for our generation into those markets.

And by the time you burn the gas, take it through a number of stepped down transformers and get it to a heating load at your house.

It's a very inefficient way of getting that, energy to your house versus burning the gas in your home.

So kind of, you know, prett uninformed approach practically.

But it's it's become politically popular to fight that.

And nobody's being held accountable to to addressing the facts, unfortunately.

So again, from a pipeline standpoint, we probably we're probably better off seeing it converted into electric load, because if you got to move more energy, but it's really no the right answer for a country kind of along those lines in terms of protest and all that permitting reform.

You know, I've had the senator, yes, Senator Dan Sullivan on for years has been trying to make permitting a little more sensible.

And his his basic philosophy is if you have a new project, let's permit it at the, you know, normal, normal process, which you know, one could argue about that too, but, you know, make i go through the proper reviews.

But if you have a project where you're simply replacing a bridge, you're replacing a road, you're replacing a pipeline or transmission line you shouldn't have to go through, you know, the whole process.

Again, where are we with that?

Why haven't we made more progress?

You know, this is unfortunate.

I'm very hopeful that we're going to see some moderate Democratic senators.

Actually, they know better.

Frankly.

They know goo and well that our infrastructure and our permitting here in the US needs to change.

Unfortunately, it' not where their campaign dollars come from.

And so they're very reluctant within their own party to support that, which is very unfortunate.

But I do think I'm very hopefu that we're going to see people stand up and do the right thing on both sides of the aisle and get to some real bye bipartisan movement on permitting reform.

It is so necessar if people saw the kind of money that is wasted.

And by the way, that's not coming out of our pocket as a pipeline company.

Yes, it's going to cost us more, but that just means we're going to charge more for on the tariff, for the pipe, for the customer pays ultimately, ultimately.

And so people really think they've done a great thin when they stopped the pipeline.

And all they've done is drive their cost up.

And so, it's a, you know, it's something that's near and dear to my heart.

We have a project right now called the Southeast Supply Enhancement Project, which comes out of Virginia on the Transco system, and it's moving Appalachian Gas into the, North Carolina South Carolina and Georgia markets, which are growing rapidly due to data centers and a permitting environment that encourages that.

Though that project, the pipeline itself is one cost, the permitting, just the permitting expenses.

This is paperwork and lawyers and fights in court process is is is twice as much as what it cost to build the pipe.

That's crazy.

Yeah, but most people don't know.

No.

And it's but it's the thing that amazes me i that people get excited about, oh yeah, we're going to punch the big ba pipeline company in the mouth.

They're really not they're they're punching themselves in the mouth.

And and the people that are stopping that, you know, this last winter, we saw natural gas prices into the New York City gates go to $98 and a MMBtu and a 120 mile less 120 miles away.

In Pennsylvania, gas there was selling for about 5 or $6 in.

And then they do same time.

So and that and that is purely because Governor Cuomo stopped to pipeline projects, the Constitution pipeline and the Nesi.

If those projects had been built, you wouldn't have seen that bottleneck in the gas prices and you wouldn't seen those.

But that's an extraordinary difference.

Speaking of regulation, Doge Elon Musk's effort to make government more efficient seems to me to have been, at least to date, grossly misguided that instead of saying, okay, let's take a look at what needs to be done, find out where the problems are, address those problems, and said he's taking a machete to things.

People are being fired in some cases, you know, people whose jobs and positions are absolutely necessary.

What's your take on what' your honest take on on all that.

Well, and you know, and if yo get Elon mad, I can tell that.

Well, first of all, I would sa I absolutely applaud the effort of going in and making sure that we're gettin our money's worth when it comes to the administration of our government.

There's no doubt in my mind.

And I can I mean, I migh the list goes on and on and on of the personal experiences I've had with the waste that goes on at that level.

And I don't think there's very many people, if they're honest, would say that they haven't deserve the same thing if they've been close enough to it.

So I am all for that.

Secondly, it's hard, and especially when a bureaucracy is as, in place and as static as the federal bureaucracy is, I can't imagine a way you could do that in a way that isn't going to feel like very tumultuous and very rough and clumsy approach to it.

I just especially within a time frame that the political motiv is driving this getting down in.

And so I would just say I'm a bit, yes.

It's clumsy.

Yes.

It's not being done perfectly, but I'm not sure how we could get it done i and doing it with the scalpel.

So, you know, in the Clinton administration, they did it with a scalpel.

Al Gore, you know, headed up a commission.

They did those kind of studies.

They targeted what could be done.

And I don't know, their saving or whatever, 3 or $400 billion, which back then was actually a lot of money, you know, toda that's like, you know, deciding whether or no you want cheese on your burger.

Admittedly so, but it strikes me the, the danger that your industry is going to face in your business is that if we'r getting rid of people wholesale and not being surgical or not even being that thoughtful about it, you're going to lose people who have who do have institutional history.

You're going to lose people who actually are good at processing firms.

I agree with that.

And I think, you know I've visited with several of the agency heads and they very much are concerned about that.

And I do think that that voice getting back to the president.

And I do think that we're going to see a more cooperative, approach to it, because I think the big practical concern they have as you know, anybody that's ever run a corporation and gone through a belt tightenin exercise knows the biggest risk you have is losing your good people.

Right.

And and that's really to me that's the biggest risk is that is that they the really, you know, high quality talent that they do have in the organization that does get things done, says, you know what, I don't really need this.

I can go get a job anywhere right?

I don't really need this.

And I think that's the, you know, the risk.

So I'm, you know, I would jus say yes, it started off clumsy, but it really needs to start and it needs to get done.

And I do think I'm fairly confident that the agency heads are getting their message across.

Well, the potential is there.

Alan, thanks so much.

Yeah.

Thank you very much.

Really enjoyed it.

You bet.

That's all the time we have for part one of our two part series with Alan Armstrong, the CEO and president of Williams Companies.

Make sure you watch part two.

I'm Aaron Harbor.

Thanks for watching.

And.

I'm.

Hi, I'm Aaron Harbor.

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