Good afternoon, everyone. It's my pleasure to introduce today's keynote speaker, Chad Zamarin, who's the CEO of Williams Companies. Chad just recently became CEO in July of this year. Before that, he was Executive Vice President of Corporate Strategic Development for Williams. He was overseeing enterprise-level strategy, business development, customer relationship management, was responsible for commodity marketing, upstream ventures, new energy ventures, communications, corporate and social responsibility. I don't know what else Williams does, but I would say, you know, naming Chad the CEO is a formality because he was running the place already. Before that, Chad was President of Midstream at Cheniere Energy. So he's had a long career in energy. And without further ado, I'll turn it over to Chad. Thanks for joining us here.
Thanks, Mike. All right. Can you hear me okay on this mic?
Yeah?
All right. Well, thanks for having me. It is great to be here in Denver. And I'm going to go through a few quick slides, but hopefully also leave it open for a little bit of Q&A. You know, we haven't been here at the conference in a while, at least. I'm here with Caroline Sardella, who's on our IR team. But we were excited to come back. She's actually got some history with coming to the conference back in the WPX days. And so it's great to be back. And I want to thank EnerCom for having us here. And just as a little bit of a refresh for those that don't spend a lot of time in our sector, you know, this is a really incredible company to have the privilege to work for.
You know, Williams was founded over 100 years ago, founded in Arkansas, actually, as a construction company that built sidewalks and water infrastructure. Moved in the early 1900s to Tulsa, Oklahoma, and started building some of the nation's most critical energy infrastructure, and over time, built some of the most incredible energy infrastructure around the world. In fact, I tell a story. You know, you think about how challenging it is to build infrastructure, and I'll hit on that in a moment, but, you know, a little fun fact about our company, and there are a lot of stories you could tell about the history of the company, but, you know, back in the 1940s, most people don't know that German submarines were actually sinking oil tankers in the Gulf of Mexico as part of World War II.
We were trying to send oil up to the eastern seaboard so that we could power our war efforts to support our allies in Europe. And German submarines were actually sitting in the Gulf of Mexico sinking our oil tankers. And so the American government called on the Williams brothers and the Williams Companies to build the War Emergency Pipelines. And in under 365 days, we built two pipelines from Texas to New York City to move crude oil from the Gulf Coast to the Northeast to power the war efforts. You know, from concept to completion in under a year, we built two cross-country pipelines. And then after the war, we actually converted those pipelines to natural gas. And they're still in service today.
So you think about the innovation, the ingenuity of our country and a company like ours, you know, to remain relevant for over a century and to now find ourselves at such an incredible time with the convergence of technology, energy, and opportunity is a really remarkable time. But today, we are one of the country's largest infrastructure companies, primarily focused on the natural gas value chain. But if you followed our story, we're also making sure that we're keeping an eye around the corner and developing some of the technologies and opportunities that we think are going to be the energy systems of the future. And I'll touch on a little bit of that. But where we're focused from a strategy perspective, this shouldn't be hopefully a surprise to anyone when you think about energy systems.
But at the end of the day, energy needs to be reliable, it needs to be affordable, and it needs to be clean. And sometimes we get this equation out of balance. You know, you can have energy that is 100% clean. And no matter what you hear on the news, it's not going to be reliable. It's not going to be affordable, at least with the technologies that we have today. Now, you can also go to the vast other end of the spectrum. It's a lot easier to cut down a tree and light a fire than it is to engineer a solution that has a better balance of affordability, clean, and reliable. And so that's the equation that we, as a society, are constantly trying to keep in balance and over time trying to create more and more sustainable energy solutions.
But you can't take your eye off keeping these three in balance. And our calculus is that today, at scale, the solution that provides the greatest balance of these three is natural gas. And increasingly, we add to these three variables of the equation the need for speed and the need for dispatchability. And I'll talk about that. But the race is truly on for the next generation of technology. And so not only do we need to feed the world's incredible need for clean, reliable, affordable energy, but we also have to power the technologies of the future. And the race is on. And we have to do that quickly. And so we're very focused today on how natural gas can be an accelerator in that space.
But to be clear, we're also focused on making sure we remain relevant for the next century and beyond, so we keep developing other and eye towards other technologies as we evolve as a country and as a company, and so, as I mentioned, the race is certainly on, but I want to show a few things that if you remember a couple of charts from today, I would encourage you to remember these. These aren't about Williams. These are frankly about all of us. For the last 20 years, 25 years, you know, you go back to just the year 2000, that's actually not that long ago, 25 years ago, you could have walked into a Walmart and pretty much bought anything you wanted made in America. We were the world's dominant manufacturer. Almost 30% of the world's manufacturing capacity was here in the United States.
Today, we have less than half that. China was less than 10% of the world's manufacturing capacity, and China is now approximately 30% of the world's manufacturing capacity, so we have been a decline from a manufacturing capacity perspective while China has been on the rise, and if you look at electricity production, we've been asleep for the last 25 years, and look at what China's done. We have not grown electricity production in the United States for the last 25 years. China has increased electricity production by almost 10 times and is now the most dominant electricity producer on the planet and continues to grow at a pace that far exceeds the growth in the United States, and so, you know, I've said this now a few times. We've been sitting on the couch. You know, I saw the donuts out in the lobby, you know, earlier today.
We've been literally, like, sitting on the couch eating donuts. China has been in the gym, like, pumping iron, pumping steroids. You remember Rocky III? Like, Ivan Drago, no, that was Rocky IV. Ivan Drago, Rocky had gotten a little bit lazy. You know, success was getting to his head, and, you know, Russia was, like, pumping up the big bad, you know, boxer. Like, that's where we find ourselves today, and yet we're being presented with this opportunity, but also this challenge. The race is on. The battle is on for who's going to dominate the next generation of technology, and it's all going to be about energy production converting into intelligence, and if we can't ramp our energy production, we aren't going to win this race.
And so this is two of the slides that I've been keeping top of mind just in the last, you know, few weeks that hopefully remind all of us how important it is what we do and that we have to win this race moving forward. And one last slide on fundamentals that relates to our business and our strategy and why it's so important. This may be hard to see for some. But basically, there's a large blue wedge here that shows the growth in natural gas demand over the last 10-ish years. There's a blue line that shows the growth in capacity to deliver natural gas. And then there's a white line that shows the storage capacity in the United States over that same period. So we've been growing the demand for natural gas primarily as we've converted.
We didn't grow electricity production, but we converted from coal to natural gas, and we've been increasing LNG exports. Those have been the primary growth vehicles for natural gas demand, but we aren't keeping pace with infrastructure. This is like adding more cars to the highways, but we're not expanding the lanes. You know, we know what happens when we don't expand the lanes and we add more cars. We get traffic jams. We get accidents. We get congestion pricing. Things get more expensive. Things get more volatile. It's the same thing that happens in energy infrastructure, and so we haven't been keeping pace from an investment perspective, from an infrastructure development perspective, and so that's why we, as a company, are very focused on these fundamentals, on meeting the needs, the world's need for clean, reliable, affordable energy.
But we've got to also make sure that we can do that with speed and create energy that's readily dispatchable. And if you look at global energy demand, that's the chart on the right. This is not a Williams chart. I would say that we estimate that it's even going to be more important than that. But we show that about half of the growth in energy demand around the world will need to be met by natural gas through the year 2040. And so natural gas is going to be an incredibly important accelerator and enabler for energy for generations to come. If you look at the world's need for energy, still 60% of the world live in some form of energy poverty. You know, we take for granted what we have here today.
And yet literally millions of people, millions of children, you know, spend their days unable to read a book at night because they don't have access to electricity. You know, imagine what it means when you can change the outcome of someone's life just by allowing them the ability to read a book at night. You know, that's what we still have to make sure we can achieve everywhere around the world. I don't have these slides in here. But if you look at some of our material, you know, you look at China and its economy and what it's done to lift its people out of poverty. It has primarily fueled its rise based on burning oil, coal, a little bit of natural gas, a very small amount of renewables. That's how they grew their electricity production 10 times and far beyond.
That's how they've powered their manufacturing capability while we have kind of been sitting on the couch, you know, asleep at the wheel, and so, you know, they are now, you know, still installing a coal plant a month, and if you look at India, now the most populous country on the planet, India on a per capita basis uses about one-fifteenth the amount of energy that each of us use here in the United States. That is not because they are more efficient. That is because they don't have access to energy, and so India is where China was 25 years ago, and you can already see that India is on its path to try to lift its people out of poverty, and they're going to turn to the most available, reliable, affordable energy they can get their hands on.
So if we don't engineer better solutions, we're going to keep, you know, doing the easy thing and not creating the sustainable energy systems of the future. And so that's why we're focused on the strategy that we are. And so I'll talk a little bit about that and then leave time for Q&A. So again, just a quick snapshot of the company. We operate in virtually all the major, certainly natural gas supply basins. So about half the company today is a gathering and processing platform. The other half is a transmission and offshore business. Many of you know our pipeline systems. We operate, you know, some of the most critical energy infrastructure in the United States, Transco, arguably the most important energy infrastructure potentially, you know, in the world.
The largest and fastest growing pipeline system that runs from the Gulf Coast kind of hugs the Eastern Seaboard and up into the Northeast, but also we operate across all these other major basins, and you can see our pipeline systems up in the Pacific Northwest. Importantly, I don't show it on this slide, but a few years ago, we acquired Sequent Energy Management, which was a company that was built out of the utility space, and it was the gas supply and optimization platform for a lot of power companies in the eastern kind of half of the United States. We acquired that platform several years ago, and if you turned on the infrastructure that they operate across from a marketing and optimization perspective, we touch virtually every pipeline system across the country, and we market over 50 gigawatts effectively of power energy across our footprint.
And so we're very well positioned with our existing infrastructure, but also with our full value chain capabilities to serve the growing needs from a power and data center and innovation perspective. I'll talk a little bit about that. A couple of things just on financials. Since I know we're here at an investor conference, I do want to highlight what something we're really proud of. The teams at Williams have been incredibly focused. You know, I joined in 2018. Some of you may know I joined, sorry, 2017. I joined right after we went through a failed merger with Energy Transfer. And at that time, you know, it was frankly a good opportunity to refresh the strategy and get the company kind of focused in a new direction. And we had a balance sheet that was close to five times, you know, levered at the time.
Today, our debt to EBITDA is 3.65 times, which is well below where the rating agencies would like to see us, and so we've got plenty of balance sheet capacity. Just in 2020, we were at about 4.3 times debt to EBITDA, so you can see we have grown our earnings on a 9% annual compound annual growth rate over the last five years. Frankly, you know, industry kind of peer leading in our space, and, you know, we're currently guiding towards $7.75 billion of earnings for 2025. That's a $350 million increase to our midpoint of guidance since we set it. We actually set guidance this year at the beginning of last year, but that hopefully, you know, tries to articulate how well we're positioned for the future. We've been growing the business on a 9% annual CAGR. We have delevered the balance sheet.
We have been generating returns on invested capital in excess of 20%, and we're now finding ourselves positioned up against some of the best fundamental backdrop that we've seen, you know, in the history of the company. You think about where we started in 2020 having a more constrained balance sheet and, you know, a bit of a tougher fundamentals environment. We find ourselves now kind of blessed with the convergence of a very healthy company, but also a very opportunity-rich environment, and so that's where we're focused on delivering the next generation of growth for the company. We've been talking about a 5%-7% earnings growth rate. I don't think anyone believes that any longer. They all think it's, you know, going to be higher than that, and so do we, but we certainly have plenty of capacity to keep growing the company at a very strong pace.
And then when I think about kind of how we're positioned, again, I'll leave time maybe for some Q&A on this front. You know, we do see kind of three very important remaining fundamental vectors. There are more, but when you think about the most dominant ones for the next decade, clearly LNG, I'll start there because that's been the biggest growth story for the next decade now for some time. We've had very clear line of sight to a growth in LNG. Today, we export about 15 BCF a day of LNG in about 100 BCF a day market, so about 15% of the gas that we produce is now being exported. Now, you think 10 years ago we didn't even export natural gas. We were worried that we had to import natural gas, and so we have become the world's most dominant exporter of liquefied natural gas.
And another, you know, fun fact, you know, think about this dynamic and why it's so important and why we should be proud of what we do here as an industry. When Russia invaded Ukraine, we doubled the amount of energy imports through LNG into Europe. You know, imagine if we hadn't been in a position when Russia effectively tried to hold a continent hostage with energy. Imagine had the United States not been in a position to double LNG imports into Europe, what the world might have looked like. So our ability to produce energy in this country is something we should be very proud of, unapologetically proud. It is good for our country. Frankly, it's good for global security. And so something that is going to continue to be an important driver. We can produce some of the lowest cost, most responsible energy here in the world.
And we should be engineering that solution for our friends and allies. And so we see LNG demand doubling at least over the next 10 years. And with the trade discussions, with a lot of the energy kind of dynamics happening around the world, we're even seeing upside bias towards those forecasts. And a pretty clear line of sight. A lot of those facilities are already under construction. And you can see we touch, you know, every major LNG export corridor along the Gulf Coast, which is great. And then, you know, from a coal retirement perspective, you know, imagine this. Like, we were the only country since 2015 that met its Paris climate goals. The only country. You don't hear that very often. And the only way we met that is because we displaced coal power generation with natural gas.
60% of the emissions reductions in the United States were directly attributed to taking, converting coal power generation to natural gas. So we know that it's a powerful decarbonization solution. We still have over eight BCF a day of equivalent coal operating just in our footprint. If you converted just the plants that are operating within our footprint from coal to natural gas, it would be equivalent to taking almost 100 million cars off the road each and every day. Imagine that. Like, we're trying to electrify vehicles. How long is it going to take to electrify 100 million vehicles? And even then, what will be the energy that's produced to power those electric vehicles? We could have the emissions impact of removing almost 100 million cars off the road each and every day if we converted the coal plants that operate along our footprint to natural gas.
The challenge is we're going to need every ounce of energy that we have because of the emerging race for technology. And so we're going to continue to see coal operate longer. And we've got to get going on this next generation. So when we talk about power demand, I know everyone in the room is hearing a lot about it. We're seeing it on our system. If you look at projects that we're already announcing, we've announced several very large projects. The largest project in the history of our company, our Southeast Supply Enhancement project, will come online in 2027. And then another project we've just recently announced that'll come online, our Power Express project, which will primarily power markets in the Virginia area. That's a big data center demand area. It will come online in the early 2030s.
And in the meantime, we're meeting technology customers where their needs are. We're focused on directly powering data center facilities so that they don't have to wait for these multi-year grid expansions that unfortunately is what it takes in the United States because it's become so difficult to develop infrastructure. So we're very focused on the power demand needs to make sure that we don't lose the race for the next generation of technology. So those are three really important vectors that we'll remain focused on. And then finally, you know, just to wrap, you know, hopefully, you know, what you can take away from this is that natural gas, frankly, oil and gas, what, you know, people forget that Colorado is an oil and gas state increasingly.
And so I don't know how many hugs and high fives we're getting these days on the streets of Denver, but I hope we're still getting them. You all deserve them. But, you know, this is an important time for us to make sure we're communicating the importance of this industry because we're going to need it if we're going to succeed as a country and reach our full potential. We've been blessed as a company. We've had a great track record and well positioned kind of to take it to the next level. And so appreciate the opportunity to come and talk to you all. And I think with that, we've got about 10 minutes. So I'll open it up for Q&A.
Check, check. Cool. Chad, I was wondering if you could talk about your upstream assets that you all have?
And you bought out your JV partner in Wyoming. I'm exploring kind of the Lewis Shale there. And also specifically in the Haynesville, what's going on with the Haynesville assets? And are you trying to sell them?
Yeah. No, great question. And so both of those assets we acquired in and around 2020 when, you know, we saw kind of producers struggling to capitalize. What we saw as really good assets that happened to sit upstream of latent infrastructure that we operated. And so, you know, our interest was pretty high in making sure those assets didn't sit undeveloped when we knew we had a lot of margin and value that would be captured in our downstream infrastructure. So the asset in the Haynesville was a Chesapeake asset at the time. It was in that lower kind of southern extent of the Haynesville. It has both Haynesville and Mid-Bossier acreage.
It was just kind of we were just starting to see, you know, the Indigos and the Vines of the world have success in that area. Chesapeake was focused on the northern area and going through bankruptcy, and so we were able to acquire that asset through their bankruptcy. That asset was producing 20 million cubic feet a day at the time. Today, it's producing 600 million cubic feet a day, and so we've accomplished kind of the primary mission. We've announced an expansion of our gathering system all the way to the Gulf Coast that gets down to the LNG Corridor at Gillis, and we've now announced our final, well, not final, but our next expansion of the system to make it an up to 1.1 BCF a day gathering and downstream delivery capability, so we've driven a tremendous amount of value through that downstream infrastructure.
We are constantly exploring whether or not it's the right time. Again, kind of mission accomplished. Our goal was not to be a long-term upstream operator in the Haynesville, but we are exploring constantly, and right now might be a good time. We'll see. We don't have to sell at a low point, and so, you know, we keep an eye on the market, but Haynesville is one where, you know, we are pretty, I'd say, far along the kind of the checklist of things we wanted to accomplish, and so for the right opportunity, we'll be looking to make an exit, so I'd say stay tuned on that front. Wyoming is a little bit of a different story. We did just buy out our operating partner, which was Crowheart Energy, which was headquartered here, and still, we have operations here in Denver.
And so if anyone knew that group, great team, but became clear that, you know, an upstream-only economic equation is very different than what Williams looks at when you move volumes from production through our system, and even different than the Haynesville. Haynesville is great. We gather it. We move it through our gathering systems, but in a place like Wyoming, we gather, we process, we move the NGLs. We have a fractionator at Conway. We have infrastructure that gets all the way down to Mont Belvieu, so you think about how many times we touch that molecule and how much margin we can capture. It looks very different than an upstream-only economic equation when you think about inventory and exploration. In Wyoming, that's an almost one-million-acre footprint, so it's a massive footprint, and it's got some really interesting geology that I don't think is well enough understood.
And so, again, the goal was not to be a long-term upstream operator, but our view is we needed to have the full value chain kind of view in order to fully delineate and explore the potential value of that asset. Once we're able to prove it up and get it to its full potential, then, you know, you can consider us kind of pursuing the same strategy.
Any more on this side? Hey, Chad. Thanks for that. Really interesting. And my last name is Williams, so I'm rooting for you guys.
All right. Your name is on the building.
So you talked about AI boom really driving a lot of the growth with natural gas consumption. I'm interested to know, since that's technology, how you guys are using technology to optimize your current business and support that growth strategy.
Yeah. No, that's a great question.
I mean, it is a huge focus for us. I mean, we are trying to stay ahead of the curve. We're investing in a lot of different things, and I can go through those. It'll take a while, but I'll give you one example. You know, we are one of the largest marketers of natural gas in the United States. We took our NorTex asset, which we acquired a few years ago. It's the Dallas-Fort Worth area. It's the Tolar Hub. It's an important power hub for the DFW kind of Metroplex area, and we market around those assets all the time: storage, gas pipelines. And, you know, we took a 10-year physical trader that's been trading those assets, and then we did a pilot with five kids from across the company who volunteered, had never traded energy before in their lives, didn't even know what it meant.
And they volunteered to do AI programs that would attempt to compete with this 10-year physical trader. And so we had five kids that basically built AI models for a month. And if at the end of a month you looked back and said, "If I had perfect execution, I could predict weather, I could predict price, I could know who was buying, what loads were coming on and off a system, I could score 100%." And you can look back and kind of evaluate that. The physical trader scored 93. One of these kids scored a 96, built 12 AI models, recompiled them every night. And a light bulb for me went on. It's different. You're not going to adopt like version one and then two years later update to version two.
It's literally like an F1 pit crew that is running the car around the track and then throwing a part out, sticking a new part on, and constantly tuning the system. And that got us very excited. It doesn't mean we're going to replace the trader. But imagine if you put those capabilities together, how much more you could do. And so I'd say we're taking that kind of mentality across the company. How can we think differently about how we do the things that, you know, we've kind of just incrementally gotten better at? How do we now totally rethink it? And so we're very actively looking across the entire company.
So it's interesting. We've got this incredible demand coming on. And we've got quite a bit of supply. What are you thinking about gas prices? And what would you tell the operators or the upstream people?
Yeah, that's a dangerous question. What are you thinking? Are we looking at $7-$8 gas? That'd be nice. Yeah. We have an incredible amount of economic reserves, you know, below $5. Now, we also have an incredible amount of economic reserves that have been constrained in the Marcellus and Utica. And that is an issue as a country. You know, if you look back over the last five years, we've grown production by seven, almost 10 BCF a day. Virtually none of that came out of the Northeast, which is our lowest cost inventory. So in theory, that's where it should have turned on, but it didn't because you're constrained from an infrastructure perspective. And so we do model that through the end of the decade, you're going to have to, I mean, most models will show the Haynesville growing by 10 BCF a day.
That's incredible on top of where we are today. It's even maybe a little more than that because we've lost a little bit of volume in the Haynesville. The Permian, if it continues to grow, although, you know, you start seeing $60, even lower oil prices, you definitely see the need to turn on reserves in other basins, and at the same time, we are depleting our tier one inventory, and so, you know, one of the blessings of getting into the upstream business, frankly, is there's only one molecule that generates the value off which we all kind of benefit, right, and so understanding the reserves has been a big focus for us. Look, I do think prices will have to, through the end of the decade, increase to turn on additional inventory, but I also would never bet against the upstream producer, the innovation, and the efficiency.
I mean, even watching our partner in the Haynesville in the last five years, amount of innovation and efficiency gain. I saw, you know, we just saw 20,000, you know, foot lateral drilled in the Haynesville. Like, it's pretty incredible how we continue to get more efficient, but we'll see. But yeah, we do model prices, you know, and frankly, we want prices to stay in a range where demand is still. Today, natural gas on an oil equivalency basis is a quarter of the cost of a barrel of oil. And so that's good. Delivered at the house versus electricity, it's a quarter of the cost of electricity. So that's good. So we've got some room, but we do want to make sure natural gas stays as that affordable solution that, frankly, is complementing everything else we use from an energy perspective.
But I'm not going to give you a price, though.
Okay. We've got time for one more.
That's a lot of pressure. Chad, I want to thank you for making us feel good about oil and gas again. So thank you. I feel a lot better about it. We've gone from the age of coal to the age of natural gas. We hear a lot about small modular reactors. Are we in the early stages of going into the age of nuclear, or is this a really long run in natural gas in the efficiency and with you guys leading that? What's your thinking about that?
Yeah. And I do think it's important. We remind ourselves every day that we're an energy infrastructure company. So we do keep an eye on the things that could be both a risk to the strategy, but also an opportunity to the strategy.
And so nuclear is something that is dispatchable, is, you know, low emissions, is not affordable today, and is not practical today from a just permitting and regulatory perspective. And so we'll see if that changes. We don't see that changing quickly. And so, you know, we will continue to monitor those signposts. When we think about a sustainable strategy, those are the kind of things that we constantly monitor. So we do spend a lot of time on that. But if we look at the next decade and beyond, I mean, we're already, as a country, starting to crystallize the energy systems that we're going to need for the next decade. Like that, you've got to start now for a lot of what we want to ramp up and achieve as a country. Our company alone, like I said, we're contracting projects through now the early 2030s.
It's a great position to be in. We're starting to think about the next, you know, decade and beyond of energy. But man, it's hard to imagine that we're going to, you know, be able to win the race of the next 10, 20 years without leveraging a large part of natural gas as that power generation dispatchable, affordable, reliable, clean solution.
Okay. Thank you. Chad, thank you again for your presentation and for your time. A couple reminders for today. Presentations will begin again at 12:30 P.M. Reminder that they're 1:30 P.M., sorry. Long week already. Private company panel will take place at 4:25 P.M. this afternoon upstairs, so don't miss that. Lastly, we will have our casino night, which will follow that in the mezzanine level there. In addition, there is a charity poker tournament. So Blanca, they can still get signed up for that.
Yeah, you can still get signed up and be part of it. It's a great time. So thank you all again. And thanks to Chad.