Williams Partners (NYSE:WPZ) may spend up to $3.2 billion in capital over the next five years to build out the company's operations in the Gulf Coast area, as the company looks to take advantage of the expected growth in oil and gas activity in the shallow and deepwater areas of the Gulf of Mexico.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

Deepwater Growth
Rig activity in the Gulf of Mexico has rebounded sharply since the end of the drilling moratorium imposed by the government because of the BP oil spill. Recent data indicates that the number of rigs drilling in the deepwater Gulf of Mexico is at the highest level in two years, according to Rig Zone.

Williams has an existing network of assets in the Gulf of Mexico and plans to add to this capacity through 2017. This expansion will involve many different types of infrastructure, including oil gathering and handling, natural gas gathering and processing and fractionation.

SEE: Oil And Gas Industry Primer

Onshore Plays
Williams also believes that the company's assets are set to benefit from several high growth and emerging onshore oil and gas plays that also require infrastructure in order to be developed. These include the Eagle Ford Shale in Texas, and the Tuscaloosa Marine Shale in Louisiana and Mississippi.

Williams completed the Markham processing plant in 2011 to serve the Eagle Ford Shale and is already operating this facility at maximum capacity. The company is considering the construction of a third train at Markham, which would add capacity of 200 million cubic feet per day to this facility.

SEE: A Natural Gas Primer

In the Gulf of Mexico, Williams and partner DCP Midstream Partners (NYSE:DPM) are working on an expansion of the Discovery pipeline system. The Keathley Canyon Connector will gather natural gas from various projects in the deepwater Gulf of Mexico and transport it to onshore. The project is expected to cost $600 million and add 400 million cubic feet per day of capacity. The Keathley Canyon Connector is expected to be in operation approximately by 2014.

Some of the deepwater projects that will use this new gas gathering pipeline include Lucius, under development mainly by Anadarko Petroleum (NYSE:APC), and Hadrian South, operated mainly by Exxon Mobil (NYSE:XOM).

Williams is also building a floating production system (FPS) for Hess (NYSE:HES) at the Tubular Bells project in the Mississippi Canyon area of the Gulf of Mexico. The Gulfstar FPS will provide capacity of 60,000 barrels of oil and 200 million cubic feet of natural gas per day.

SEE: 5 Biggest Risks Faced By Oil And Gas Companies

The Bottom Line
Williams has big plans for the Gulf Coast, and has many investment opportunities available to take advantage of the future growth in oil and gas activity in in the onshore and offshore parts of this area.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Investing

    The ABCs of Bond ETF Distributions

    How do bond exchange traded fund (ETF) distributions work? It’s a question I get a lot. First, let’s explain what we mean by distributions.
  2. Investing

    Top Investment Banks In The Energy Industry

    Many global Investment banks are highly involved in the energy industry, but there are also some smaller banks and boutiques that are strong players.
  3. Stock Analysis

    3 Stocks that Are Top Bets for Retirement

    These three stocks are resilient, fundamentally sound and also pay generous dividends.
  4. Investing News

    Are Stocks Cheap Now? Nope. And Here's Why

    Are stocks cheap right now? Be wary of those who are telling you what you want to hear. Here's why.
  5. Investing News

    4 Value Stocks Worth Your Immediate Attention

    Here are four stocks that offer good value and will likely outperform the majority of stocks throughout the broader market over the next several years.
  6. Investing News

    These 3 High-Quality Stocks Are Dividend Royalty

    Here are three resilient, dividend-paying companies that may mitigate some worry in an uncertain investing environment.
  7. Stock Analysis

    An Auto Stock Alternative to Ford and GM

    If you're not sure where Ford and General Motors are going, you might want to look at this auto investment option instead.
  8. Mutual Funds & ETFs

    The 4 Best Buy-and-Hold ETFs

    Explore detailed analyses of the top buy-and-hold exchange traded funds, and learn about their characteristics, statistics and suitability.
  9. Stock Analysis

    The Biggest Risks of Investing in Netflix Stock

    Examine the current state of Netflix Inc., and learn about three of the major fundamental risks that the company is currently facing.
  10. Stock Analysis

    What Seagate Gains by Acquiring Dot Hill Systems

    Examine the Seagate acquisition of Dot Hill Systems, and learn what Seagate is looking to gain by acquiring Dot Hill's software technology.
  1. How do I read and analyze an income statement?

    The income statement, also known as the profit and loss (P&L) statement, is the financial statement that depicts the ... Read Full Answer >>
  2. Can working capital be too high?

    A company's working capital ratio can be too high in the sense that an excessively high ratio is generally considered an ... Read Full Answer >>
  3. How do I use discounted cash flow (DCF) to value stock?

    Discounted cash flow (DCF) analysis can be a very helpful tool for analysts and investors in equity valuation. It provides ... Read Full Answer >>
  4. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  5. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>
  6. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!