Williams completes reorganization focusing on geography, markets
BY ROD WALTON World Staff Writer
Friday, January 11, 2013
1/11/13 at 7:03 AM
Williams Cos. Inc. topped off its first full year as a infrastructure-focused natural gas company by reorganizing its top-to-bottom operations structure, a move that reflects current realities but with an eye on the future, CEO Alan Armstrong said Thursday.
The reorganization was completed as the new year began, with the old Midstream and Gas Pipeline units scrapped in favor of geographical and market-based "operating areas" that highlight Tulsa-based Williams' singular identity, he said. The operating areas are divided into Northeast Gathering and Processing, Atlantic and Gulf, West and NGL-Petrochemical Services.
All of the executives heading up those areas will report directly to Armstrong. Williams dropped its exploration and production segment when it spun off those assets to create WPX Energy Inc. late in 2011.
"Our previous structure served us well as an integrated natural gas company," the CEO said in exclusive responses emailed to the Tulsa World. "Today, we've built a more streamlined structure with fewer layers of management.
"The new structure supports our more tightly focused business strategy and puts resources closer to the tremendous amount of work that needs to be executed."
Williams, which owns controlling interest in pipeline and processing firm Williams Partners LP, has been on the move since spinning off and separating from WPX. The master limited partnership spent $2.5 billion on buying Caiman Eastern Midstream's assets in the gas-rich Marcellus Shale last year, then followed up by committing $380 million toward a Caiman joint venture working in the deeper Utica Shale of the eastern U.S.
Last month, Williams also invested another $2.16 billion for a big stake in Oklahoma City-based processing and pipeline mover Access Midstream Partners LP. Deals for new natural gas liquids processing capacity in the Canadian oil sands and a $289 million expansion of the partnership's interstate Transco Pipeline into New York City also have been announced.
"I've said many times that our vision is for Williams to be the premier provider of energy infrastructure in North America," Armstrong said. "Part of this strategy is to be No. 1 or 2 in basins and markets that can benefit from large-scale infrastructure."
Williams has planned nearly $15 billion in growth projects through 2016, he added.
"I think it's fair to say that you'll continue to hear about new growth opportunities for Williams - both organic projects and acquisitions - that make sense and align with our strategy," Armstrong said.
All of the company's 4,600 employees will be affected by the reorganization, though most will not see their day-to-day roles change dramatically, company officials said.
Williams employs close to 1,000 people in Tulsa.
Williams' five-year makeover
January 2008: Williams Pipeline Partners LP (WMZ), created to own 35 percent interest in Northwest Pipeline GP, holds initial public offering.
January 2010: Williams Cos. and Williams Partners announce $12 billion restructuring that includes folding WMZ into Williams Partners.
August 2010: Shareholders approve Williams Partners-WMZ merger.
January 2011: Alan Armstrong succeeds Steve Malcolm as CEO of Williams Cos. and Williams Partners
February 2011: Williams Cos. announces plan to separate into two stand-alone companies.
January 2012: Williams completes separation and spinoff of exploration and production side into WPX Energy Inc.
August 2012: Management changes announced for companywide reorganization to be completed by year's end.
January: Williams completes reorganization of management and business segments.
Questions and Answers with Williams CEO Alan Armstrong.
Explain the breakdown of this reorganization in terms of new business units compared to the old structure.
“First off, I want to be clear that Williams continues to be in the energy infrastructure business. In fact, we’ve moved away from thinking about and organizing around the idea of business units. We designed our organization to serve us well as an operating company aligned around a common strategy, shared goals and a single Williams identity.
“We’ve aligned every component of our organization to support our ability to be extremely successful at operating and developing large-scale infrastructure that helps ensure North America’s bounty of natural gas and natural gas liquids goes to its highest-value purpose and markets. We have four operating areas and we’ve created new functional areas that pull together competitively differentiating resources and expertise that allow us to bring our very best ideas and business practices to the table on a consistent basis.”
How will this affect the employees’ everyday jobs?
“Most of our 4,600 employees – particularly those who operate our facilities across 24 states and Canada – are seeing little change in their day-to-day reporting assignments. Some people will see their roles change some, while others will have completely new roles and reporting relationships tied to our newly focused strategy.
“With the shale gas revolution, our industry is changing, and we’re changing with it. There’s a critical need for infrastructure to bring this massive supply of domestically produced natural gas and natural gas liquids to market. Part of our culture at Williams is to push ourselves and tackle the change in front of us so that we are the very best company – today and in the future. “
The difference between Williams now and when you became CEO (in early 2011) is that your company is no longer involved in exploration and production. Is that why you undertook this move?
“It certainly was a big driver of the change. And the market opportunities have radically changed. Those two fundamental shifts prompted us to change our structure.”
What was lacking in the old model and why is this important now?
“Our previous structure served us well as an integrated natural gas company. It was designed for semi-autonomous units working on somewhat unique upstream, midstream and downstream operations.
“Today, we’ve built a more streamlined structure with fewer layers of management. The new structure supports our more tightly focused business strategy and puts resources closer to the tremendous amount of work that needs to be executed. Project management is one particular area that we chose to radically improve. The rapidly growing domestic production and expanding markets demand best-in-class capabilities to develop and execute large-scale infrastructure projects.”
The last three years have seen huge developments at Williams: 1) The restructuring in 2010 (which eliminated Williams Pipeline Partners and folded it into Williams Partners; 2) a new CEO (you); 3) The spinoff of exploration and production into WPX Energy; 4) The massive deals involving Caiman Energy II and Access Midstream Partners; and 5) this change taking effect this week. So is the company done changing structurally for a while?
“There are several things mentioned here, so I’d like to address each one. It’s important to understand that the first item had little to no effect on our organizational structure or on our people’s day-to-day work. It was a financial-structure transaction.
“As a newly appointed CEO, it was a natural time to reflect on our strategy. I’ll note that the spinoff of our exploration and production business had been considered as a tool to enhance shareholder value before I came into my role as CEO. The final decision to spinoff WPX was clearly a significant point in focusing our strategy on energy infrastructure and then looking at our organization to determine what we needed to be great in this space, not just good.
“The Caiman acquisition and Access Midstream investment are great examples of growth. I would expect us to continue to explore opportunities that support our current and clear strategy.
“Our organizational realignment is really the combination and culmination of all of the other items. As for future changes, Williams has been a successful company for more than 100 years. Part of our success has been our ability to constantly look at our business, and evolve and change when necessary.”
What is the short-term goal of this “new” Williams in terms of growth strategies? Will we see more deals like Caiman and Access in the near future?
“I’ve said many times that our vision is for Williams to be the premier provider of energy infrastructure in North America. And we expect to provide our shareholders with high growth in both value and dividends. Part of this strategy is to be number one or two in basins and markets that can benefit from large-scale infrastructure. Large-scale positions allow us to provide our customers with connections to the best markets and best supplies at competitive prices. As well, that scale positions us to provide our shareholders with superior returns.
“To achieve these goals, we expect to continue growing. In fact, we’ve identified nearly $15 billion in growth projects through 2016. I think it’s fair to say that you’ll continue to hear about new growth opportunities for Williams – both organic projects and acquisitions – that make sense and align with our strategy.”
Original Print Headline: Williams reorganizes with future in mind
Rod Walton 918-581-8457