That’s not the way gas service works. And it will be a pretty catastrophic event. So thank you for asking the question because we certainly try to make it clear that we’ve got to invest adequately in our infrastructure, and it is going to take permitting reform to do that. I would say we’re hopeful that we’re getting more and more the moderate left engaged on this issue and understanding how important this is for their constituents as well. So I do think we’re making progress on it, but it is a very large issue if we hope to keep up with demand. We’re going to have to get better at building out infrastructure here in the U.S.
Tristan Richardson: Appreciate it. And then maybe, John, just a smaller one. You appreciate kind of laying out sort of some of the puts and takes in the [indiscernible] segment year-over-year. But is there a number we can think of as what was the organic growth in the quarter? Just thinking about Hartree contributions as well as sort of a partial anniversary of MountainWest?
John Porter: Yes. I think we think the acquisitions as it relates to Hartree and MountainWest Pipeline have tracked very well to the announcements we made in terms of the valuation and the multiples that were involved there. So I think you can — you can rely pretty much in terms of sizing those impacts as to the announcements we made at the time of the acquisition. Obviously, with MountainWest Pipeline that closed on Valentine’s Day in 2023. So that kind of allows you to size the relative size of the uplift in ’24 versus ’23 for MountainWest Pipeline. With Hartree, it closed very early in the year. So we pretty much had a full quarter of Hartree. So I think that I would just say size those two pieces. It was a strong quarter for Transco.
No doubt, they did have the nice uplift from partial and service of Regional Energy Access, but they had some good seasonal revenues as well. And we did mention a couple of things that work the other way though, the Bayou Ethane divestiture that we had last year, and I think we put some information out about that — the size of that divestiture as well. And then we did have some planned downtime at Discovery, which was an impact as well.
Operator: Our next question comes from John Mackay with Goldman Sachs.
John Mackay: Maybe to keep it in the gas demand policy front. You guys have also talked a lot about coal plant retirements on your footprint, you kind of framed up maybe an upside number at the Analyst Day earlier this year. Just be curious, any thoughts you can share on the recent EPA updates around power plant carbon emissions? And how that’s playing into your forward view?
Micheal Dunn: John, this is Micheal. Yes, obviously, we’re watching that closely and the fact that these new gas-fired power plants have to have some kind of sequestration on them in the — in the midterm, I would say, is certainly taken into consideration by the utilities that are building these plants. I think ultimately, we’ll probably be tempering of that. That’s my opinion that whenever you see the EPA power plan come out with a new rule, it’s certainly subject to litigation as they happened several times now, and I suspect this one will be no different. But that will be a challenge, I think, for the industry to respond to a lot of that sequestration requirement in regard to these combined cycle power plants. I mean it’s technology that is available but it is going to be expensive.
It’s going to be expensive for the end user and the consumers. And I certainly think utilities will take that into consideration in their plans. But we’ll definitely see some coal plant retirements accelerating. And I think the rub there is, will they be able to meet demand with the acceleration of coal plant retirements with the AI boom that we’re seeing. And I think that’s going to be a big base in the boardrooms for the utilities to come.
Alan Armstrong: Yes. And I would just add to that, the issue around sequestration, if you think about how difficult it’s been to build sequestration pipelines in South Dakota and Iowa, in serving those markets. And if you think that we’re going to be able to take sequestration to a new level in areas where there isn’t good underground resources for sequestration along the East Coast. And pipe that through heavily populated areas. I just think that is very unrealistic perspective right now. And so I think this is a place again where politics and the popular notion of politics and good old-fashioned hard physics are not matching up. And to have the Sierra Club fighting a CO2 pipeline in Iowa that’s going to sequester carbon, is really, I think, a forewarning about the practical nature of being able to sequester large volumes of CO2 in these heavily populated areas.
John Mackay: I appreciate all that. Maybe just zooming back in on you guys specifically quickly. Appreciate the frame up of the gas storage opportunity. At the very beginning, you mentioned the rates have come into making brownfield economics work. I guess I’d just be curious like, how much do you think you guys can add on a Bcf basis across your existing footprint from a Brownfield perspective?
Alan Armstrong: Well, I mean, the fact is we have the right away through those areas. And so there’s a very large number, but it’s not as simple — it’s not a finite number by any stretch of imagination and it has its economic limits. And so said another way, it may not have its physical limits because we have the right of way through there, but it certainly has its economic limits. And so obviously, the easiest thing to do is to add compression in the area. And then next is replacing lines that are — that we’ve had to derate over time.
Unidentified Company Representative: I think it’s about storage.
Alan Armstrong: Sorry, on storage. Sorry, I thought we were back on Transco sorry about that. I’ll let Chad take that forward.
Chad Zamarin: Yes, sorry. Just on storage. We do have quite a bit of capacity at the salt-cavern facilities that we acquired in the Gulf Coast. And so — and those expansions that we’re looking at would likely come in kind of 10 Bcf tranches at each facility. And there is a lot of capacity to expand. I think we’re going to be thoughtful about how to do that incrementally as the market kind of recognizes the need. And we’re seeing that evolution, but we need to see storage contracts shift from short term to long term for us to support that kind of infrastructure expansion. But it would look like kind of 10 Bcf cavern expansions at those salt-cavern facilities.
Operator: Our next question comes from Sunil Sibal with Seaport Global.
Sunil Sibal: So I wanted to start off — a little bit big picture question. So it seems like you’re executing pretty well on the guidance, the ’24 and ’25. So I was curious if your actual performance comes out to be above the top end of your guidance ranges? What’s the best incremental use of the cash flows in the current environment, especially if this permitting constraints continue?
Alan Armstrong: Yes. Well, that is a great question and one that gets a lot of debate both and this team and within the boardroom as well. And it’s a very astute question because if you look at the math, that starts to build on us pretty quickly, we saw the outlook — positive outlook change coming from S&P on our Credit Rating. And so that we think will meet the conditions for that here through the balance of the year. So only so much more value, I would argue to be added in that regard. But I would say, certainly, our dividend policy is one lever, share buybacks, another and acquisitions of bolt-on transactions that have continued to add a lot of value and ones that we’re really excited about the way our teams have performed on taking these assets and extremely quickly extracting the synergies that we expect out of them.
And so we have been very purposeful about building the capabilities within the organization to be able to act quickly and decisively on those kind of bolt-on transactions. And so we’ll keep our eyes on that. Certainly, we’ve seen — so far, we’ve seen a lot of value that we can add by being the operator on those kind of assets to make them immediately accretive transactions. And so we’ll sort of keep our eyes open for those kind of bolt-on, very tightly aligned with strategy acquisitions as well.
Sunil Sibal: And then in the Northeast, it seems like MVPs really start up pretty soon. And I was kind of curious in the current gas price environment, how do you think that impacts the producer reactions and then what kind of operating leverage you have in your systems to kind of benefit from that in the near term?
Alan Armstrong: Yes, great question. I think right now, as we sit here today. The power gen loads will be pretty strong this summer if the weather predictions that are out there are accurate right now. I think we’ll see some pretty strong pools and that pipe and those gas supplies serve that will be capable of responding to that. And that’s probably the extent of what we would see here in the immediate term for that, as our expansions that we’re working on like the Southeast supply and expansion, system come on in the years ahead, that will start to take full advantage of those incremental supplies. And we’ll see areas where we gather the volumes upstream on that benefit from that. But importantly, our ability to expand Transco is a lot lower cost and a lot higher margin for us if we have supply coming in there at 165.
And so that’s a huge positive for us to have high-pressure supplies coming into our system right there at 165. And so we’ll see. I’m fairly confident we’ll see some fairly significant additional expansions from 165 and take advantage of that on the Transco system.
Operator: This concludes the question-and-answer session. I would now like to turn it back to Alan Armstrong for closing remarks.
Alan Armstrong: Okay. Well, thank you all very much. We’re very excited to deliver another record at the company and not just for the quarter that it produced in terms of the present a lot of people are talking about what they’re going to do in the future. We continue to deliver in the present. But we also have a very strong future ahead of us and are extremely well positioned for not just the next couple of years, but for the next decades, as we were contracting for these major expansions on our system. So very excited to see a strategy that we’ve stuck with for years now really coming home and all the benefits that we thought natural gas had to offer the market start to be realized by others and putting a lot of demand on our infrastructure.
So very excited to see this turn here in the quarter and very thankful for all the extraordinary efforts of the employees and the leadership of this company and the management team that I get to work with for continuing to deliver such great results. So thanks for joining us today.
Operator: Thank you for your participation in today’s conference. This concludes the program. You may now disconnect.
