What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-02-28 compared with 2021-02-24 · 184 added, 127 removed, 350 unchanged (47% of the section changed)

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and, unless the context otherwise indicates, all of our subsidiaries) is at times referred to in the first person as “we,” “us,” or “our.” We also sometimes refer to Williams as the “Company.”

We are an energy infrastructure company committed to be the leader in providing infrastructure that safely delivers natural gas products to reliably fuel the clean energy economy.

We have operations in 15 supply areas that provide natural gas gathering, processing, and transmission services and natural gas liquids fractionation, transportation, and storage services to more than 600 customers.

We own an interest in and operate over 30,000 miles of pipelines, 34 processing facilities, 9 fractionation facilities, and approximately 23 million barrels of NGL storage capacity, handling approximately 30 percent of the nation’s natural gas volumes.

We are an energy company committed to being the leader in providing infrastructure that safely delivers natural gas products to reliably fuel the clean energy economy.

We have operations in 14 supply areas that provide natural gas gathering, processing, and transmission services, NGLs fractionation, transportation, and storage services, and marketing services to more than 600 customers.

We own an interest in and operate over 30,000 miles of pipelines, 29 processing facilities, 7 fractionation facilities, and approximately 23 million barrels of NGL storage capacity, and deliver natural gas that is used every day for clean-power generation, heating, and industrial use.

We were founded in 1908, originally incorporated under the laws of the state of Nevada in 1949 and reincorporated under the laws of the state of Delaware in 1987.

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Service Assets, Customers, and Contracts

Key variables for our businesses will continue to be:

• Obstacles to our expansion efforts, including delays or denials of necessary permits and opposition to hydrocarbon-based energy development;

• Producer drilling activities impacting natural gas supplies supporting our gathering and processing volumes;

• Retaining and attracting customers by continuing to provide reliable services;

• Revenue growth associated with additional infrastructure either completed or currently under construction;

• Prices impacting our commodity-based activities;

• Disciplined growth in our service areas.

Interstate Natural Gas Pipeline Assets

Our interstate natural gas pipelines, which are presented in our Transmission & Gulf of Mexico segment as described under the heading “Business Segments,” are subject to regulation by the FERC and as such, our rates and charges for the transportation of natural gas in interstate commerce are subject to regulation.

The rates are established through the FERC’s ratemaking process.

The rates are established primarily through the FERC’s ratemaking process, but we also may negotiate rates with our customers pursuant to the terms of our tariffs and FERC policy.

Our interstate natural gas pipelines transport and store natural gas for a broad mix of customers, including local natural gas distribution companies, public utilities, municipalities, direct industrial users, electric power generators, and natural gas marketers and producers.

Our interstate natural gas transmission businesses are fully contracted under long-term firm reservation contracts with high credit quality customers.

These contracts have various expiration dates and account for the major portion of our regulated businesses, and are not exposed to crude oil prices.

Additionally, we offer storage services and interruptible transportation services under shorter-term agreements.

These contracts have various expiration dates and account for the major portion of our regulated businesses.

Additionally, we offer storage

services and interruptible transportation services under shorter-term agreements.

Transco’s and Northwest Pipeline’s three largest customers in 2021 accounted for approximately 26 percent and 52 percent, respectively, of their total operating revenues.

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Typically, natural gas, in its raw form, is not acceptable for transportation in major interstate natural gas pipelines or for commercial use as a fuel.

Our treating facilities

remove water vapor, carbon dioxide, and other contaminants, and collect condensate.

Our treating facilities remove water vapor, carbon dioxide, and other contaminants, and collect condensate.

We are generally paid a fee based on the volume of natural gas gathered and/or treated, generally measured in the Btu heating value.

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Our top ten customers accounted for approximately 75 percent of our gathering and processing fee revenues and NGL margins from our noncash commodity-based agreements.

We believe counterparty credit concerns in our gathering and processing businesses are significantly mitigated by the physical nature of our services, where we gather at the wellhead and are therefore critical to a producer’s ability to move product to market.

We believe counterparty credit concerns in our gathering

and processing businesses are significantly mitigated by the physical nature of our services, where we gather at the wellhead and are therefore critical to a producer’s ability to move product to market.

Gas and NGL Marketing

Prior to the organizational realignment described under the heading “Business Segments,” certain of our commodity marketing activities were presented within our West reporting segment, while those acquired in 2021 as part of our Sequent Acquisition, which includes the operations of Sequent Energy Management, L.P.

and Sequent Energy Canada, Corp.

acquired on July 1, 2021 (Sequent Acquisition), were reported within the Sequent segment.

Beginning in January 2022, our NGL and natural gas marketing services are now presented primarily within our Gas & NGL Marketing Services segment.

We market natural gas and NGL products to a wide range of users in the energy and petrochemical industries.

In 2021, our three largest natural gas marketing customers accounted for approximately 13 percent of our gross natural gas marketing sales, and our three largest NGL marketing customers accounted for approximately 46 percent of our NGL marketing sales.

Our gas marketing business markets natural gas from the production at our upstream properties and provides asset management and the wholesale marketing, trading, storage, and transportation of natural gas for a diverse set of natural gas utilities, municipalities, power generators, and producers, and moves gas to markets through transportation and storage agreements on strategically positioned assets.

Our pipeline agreements connect with multiple pipelines that provide our customers with access to diverse sources of supply and various natural gas markets.

The southeastern market served by our Gas & NGL Marketing Services segment is the fastest growing natural gas demand region in the United States and expands our natural gas marketing activities, as well as optimizes our pipeline and storage capabilities with expansions into new markets.

We purchase natural gas for storage when the current market price paid to buy and transport natural gas plus the cost to store and finance the natural gas is less than an estimated, forward market price that can be received in the future, resulting in positive net product sales.

Commodity-based exchange-traded futures contracts and over-the-counter (OTC) contracts are used to sell natural gas at that future price to substantially protect the natural gas revenues that will ultimately be realized when the stored natural gas is sold.

Additionally, we enter into transactions to secure transportation capacity between delivery points in order to serve our customers and various markets.

Commodity-based exchange-traded futures contracts and OTC contracts are used to capture the price differential or spread between the locations served by the capacity in order to substantially protect the natural gas revenues that will ultimately be realized when the physical flow of natural gas between receipt and delivery points occurs.

Monthly demand charges incurred for the contracted storage and transportation capacity and payments associated with asset management agreements are substantially indirectly reimbursed by our customers.

As we are acting as an agent, our natural gas marketing revenues are presented net of the related costs of those activities.

In addition, all of our Sequent’s derivative activities qualify as held for trading purposes, which requires net presentation in the Consolidated Statement of Income.

Prior to the integration in 2022 of our historical gas marketing business with the acquired Sequent gas marketing business, natural gas marketing revenues and costs for our historical business were reported on a gross basis.

Following the integration in 2022, the entire natural gas marketing portfolio is considered held for trading purposes, and the related revenues are therefore presented net of the related costs of those activities in 2022.

Our NGL marketing business transports and markets our equity NGLs from the production at our processing plants, NGLs from the production at our upstream properties, and also NGLs on behalf of third-party NGL producers, including some of our fee-based processing customers, as well as the NGL volumes owned by RMM and Discovery.

The NGL marketing business bears the risk of price changes in these NGL volumes while they are being transported to final sales delivery points.

In order to meet sales contract obligations, we may purchase products in the spot market for resale.

We are exposed to commodity price risk.

To manage this volatility, we use various contracts in our marketing and trading activities that generally meet the definition of derivatives.

We enter into commodity-related derivatives to hedge exposures to natural gas and NGLs and retain exposure to price changes that can, in a volatile energy market, be material and can adversely affect our results of operations.

We experience significant earnings volatility from the fair value accounting required for the derivatives used to hedge a portion of the economic value of the underlying transportation and storage portfolio.

However, the unrealized fair value measurement gains and losses are generally offset by valuation changes in the economic value of the underlying transportation and storage portfolio, which is not recognized until the underlying transportation and storage transaction occurs.

Crude Oil Transportation and Production Handling Assets

Our crude oil transportation operations, which are presented in our Transmission & Gulf of Mexico segment as described under the heading “Business Segments,” earn revenues typically by volumetric-based fee arrangements.

Revenue sources have historically included a combination of fixed-fee, volumetric-based fee, and cost reimbursement arrangements.

Generally, fixed fees associated with the production at our Gulf Coast production handling facilities are recognized on a units-of-production basis.

Certain fixed fees associated with the production at our Gulfstar One facility are recognized based on contractually determined maximum daily quantities.

Our crude oil transportation operations, which are presented in our Transmission & Gulf of Mexico segment as described under the heading “Business Segments,” earn revenues primarily from a combination of fixed-monthly fees, contractual fixed or variable fees applied to production volumes, and contributions in aid of construction (CIAC) arrangements.

Generally, fixed-monthly fees associated with production handling and export revenues are recognized on a units-of-production basis utilizing either contractually determined maximum daily quantities or expected remaining production.

CIAC arrangements are recognized based on a units of production basis, utilizing expected remaining production.

Our crude oil transportation business is supported mostly by major oil producers with long-cycle perspectives.

Key variables for all of our businesses will continue to be:

• Obstacles to our expansion efforts, including delays or denials of necessary permits and opposition to hydrocarbon-based energy development;

• Producer drilling activities impacting natural gas supplies supporting our gathering and processing volumes;

• Retaining and attracting customers by continuing to provide reliable services;

• Revenue growth associated with additional infrastructure either completed or currently under construction;

• Prices impacting our commodity-based activities;

• Disciplined growth in our service areas.

BUSINESS SEGMENTS

Consistent with the manner in which our chief operating decision maker evaluates performance and allocates resources, our operations are conducted, managed, and presented in Part I of this Annual Report within the following reportable segments:

Transmission & Gulf of Mexico, Northeast G&P, and West.

Transmission & Gulf of Mexico, Northeast G&P, West, and Gas & NGL Marketing Services.

Effective January 1, 2022, following an organizational realignment, our NGL and natural gas marketing services, previously reported within the West and former Sequent segments, are now all managed within the Gas & NGL Marketing Services segment.

Our reportable segments are comprised of the following business activities:

• Transmission & Gulf of Mexico is comprised of our interstate natural gas pipelines, Transco and Northwest Pipeline, as well as natural gas gathering and processing and crude oil production handling and transportation assets in the Gulf Coast region, including a 51 percent interest in Gulfstar One (a consolidated variable interest entity), which is a proprietary floating production system, a 50 percent equity-method investment in Gulfstream, and a 60 percent equity-method investment in Discovery.

• Northeast G&P is comprised of our midstream gathering, processing, and fractionation businesses in the Marcellus Shale region primarily in Pennsylvania and New York, and the Utica Shale region of eastern Ohio, as well as a 65 percent interest in our Northeast JV (a consolidated variable interest entity) which operates in West Virginia, Ohio, and Pennsylvania, a 66 percent interest in Cardinal (a consolidated variable interest entity) which operates in Ohio, a 69 percent equity-method investment in Laurel Mountain, a 99 percent interest in Caiman II (a former equity-method investment which is a consolidated entity following our November 2020 acquisition of an additional ownership interest) which owns a 50 percent equity-method investment in Blue Racer, and Appalachia Midstream Investments, a wholly owned subsidiary that owns equity-method investments with an approximate average 66 percent interest in multiple gas gathering systems in the Marcellus Shale region.

• West is comprised of our gas gathering, processing, and treating operations in the Rocky Mountain region of Colorado and Wyoming, the Barnett Shale region of north-central Texas, the Eagle Ford Shale region of south Texas, the Haynesville Shale region of northwest Louisiana, and the Mid-Continent region which includes the Anadarko, Arkoma, and Permian basins.

This segment also includes our NGL and natural gas marketing business, storage facilities, an undivided 50 percent interest in an NGL fractionator near Conway, Kansas, a 50 percent equity-method investment in OPPL, a 50 percent equity-method investment in RMM, and a 20 percent equity-method investment in Targa Train 7.

• Other includes minor business activities that are not reportable segments, as well as corporate operations.

Detailed discussion of each of our reporting segments follows.

• Northeast G&P is comprised of our midstream gathering, processing, and fractionation businesses in the Marcellus Shale region primarily in Pennsylvania and New York, and the Utica Shale region of eastern Ohio, as well as a 65 percent interest in our Northeast JV (a consolidated variable interest entity) which operates in West Virginia, Ohio, and Pennsylvania, a 66 percent interest in Cardinal (a consolidated variable interest entity) which operates in Ohio, a 69 percent equity-method investment in Laurel Mountain, a 50 percent equity-method investment in Blue Racer, and Appalachia Midstream Investments, a wholly owned subsidiary that owns equity-method investments with an approximate average 66 percent interest in multiple gas gathering systems in the Marcellus Shale region.

This segment also includes our NGL storage facilities, an undivided 50 percent interest in an NGL fractionator near Conway, Kansas, a 50 percent equity-method investment in OPPL, a 50 percent equity-method investment in RMM, and a 20 percent equity-method investment in Targa Train 7.

• Gas & NGL Marketing Services includes our NGL and natural gas marketing services previously reported within the West segment prior to January 1, 2022, as well as the operations acquired on July 1, 2021 through our Sequent Acquisition.

• Other includes our upstream operations and minor business activities that are not reportable segments, as well as corporate operations.

Detailed discussion of each of our reportable segments follows.

For a discussion of our ongoing expansion projects, see Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management’s Discussion and Analysis of Financial Condition and Results of Operations, which along with Item 8.

Financial Statements and Supplementary Data, continues to present our segments as they were historically defined before the organizational realignment on January 1, 2022.

Transmission & Gulf of Mexico

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At December 31, 2021, Transco’s system had a system-wide delivery capacity totaling approximately 18.6 MMdth/d.

During 2020, Transco completed one fully-contracted expansion and began partial early service on two additional fully-contracted expansions, which added more than 0.5 MMdth of firm transportation capacity per day to our pipeline.

Transco’s system includes 57 compressor stations, four underground storage fields, and one LNG storage facility.

During 2021, Transco completed two fully-contracted expansions, which added more than 0.5 MMdth/d interim firm transportation capacity to the pipeline.

In addition, we added more than 0.1 MMdth/d of interim firm transportation capacity to our pipeline which will continue until the Regional Energy Access expansion project is placed in service, please refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Company Outlook.” Transco’s system includes 59 compressor stations, four underground storage fields, and one LNG storage facility.

Compression facilities at sea level-rated capacity total approximately 2.4 million horsepower.

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Northwest Pipeline’s system includes 42 transmission compressor stations having a combined sea level-rated capacity of approximately 473,000 horsepower.

Northwest Pipeline owns a one-third undivided interest in the Jackson Prairie underground storage facility in Washington and contracts with a third party for natural gas storage services in the Clay basin underground field in Utah.

Northwest Pipeline also owns and operates an LNG storage facility in Washington.

Northwest Pipeline also owns and operates a LNG storage facility in Washington.

These storage facilities have an aggregate working natural gas storage capacity of 14.2 MMdth, which is substantially utilized for third-party natural gas.

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Non-consolidated:

Central Gulf of Mexico 594 0.6 60% Western Gulf of Mexico

Central Gulf of Mexico 594 0.6 60% Central Gulf of Mexico

Natural Gas Processing Facilities

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Non-consolidated:

Discovery Larose, LA 0.6 32 60% Western Gulf of Mexico

Discovery Larose, LA 0.6 32 60% Central Gulf of Mexico

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Non-consolidated:

75 10 60% Western Gulf of Mexico

75 10 60% Central Gulf of Mexico

(1) Statistics reflect 100 percent of the assets from our 51 percent interest in Gulfstar One.

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2021 2020 2019

(Annual Average Amounts)

Consolidated:

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(1) Includes 100 percent of the volumes associated with operated equity-method investments.

(2) Annual average Mbbls/d.

Certain Equity-Method Investments

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Laurel Mountain Pennsylvania 1,145 0.9 69% Appalachian

Blue Racer West Virginia & Ohio 723 1.5 50% Appalachian

Natural Gas Processing Facilities

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Consolidated:

Fort Beeler Marshall County, WV 0.5 62 65% Appalachian

Oak Grove Marshall County, WV 0.4 50 65% Appalachian

Fort Beeler Marshall Co., WV 0.5 62 65% Appalachian

Oak Grove Marshall Co., WV 0.6 75 65% Appalachian

Kensington Columbiana Co., OH 0.6 68 65% Appalachian

Leesville Carroll Co., OH 0.2 18 65% Appalachian

Non-Consolidated:

Berne Monroe Co., OH 0.4 60 50% Appalachian

Natrium Marshall Co., WV 0.8 120 50% Appalachian

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Other NGL Operations

We own and operate a 43 Mbbls/d NGL fractionation facility at Moundsville, West Virginia, de-ethanization and condensate facilities at our Oak Grove processing plant, a condensate stabilization facility near our Moundsville fractionator, and an ethane transportation pipeline.

Our Oak Grove de-ethanizer is capable of handling up to approximately 80 Mbbls/d of mixed NGLs to extract up to approximately 40 Mbbls/d of ethane.

Our condensate

stabilizers are capable of handling approximately 17 Mbbls/d of field condensate.

Our condensate stabilizers are capable of handling approximately 17 Mbbls/d of field condensate.

We also own and operate 44 Mbbls/d of condensate stabilization capacity, a 135 Mbbls/d NGL fractionation facility, approximately 970,000 barrels of NGL storage capacity, and other ancillary assets, including loading and terminal facilities in Ohio.

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Ethane produced at our de-ethanizer is transported to markets via our 50-mile ethane pipeline from Oak Grove to Houston, Pennsylvania.

The remaining mixed NGL stream from the de-ethanizer is then transported via pipeline and fractionated at either our Moundsville or Harrison County, Ohio, fractionation facility.

The remaining mixed NGL stream from the de-ethanizer is then transported via our 50-mile NGL pipeline and fractionated at either our Moundsville or Harrison County, Ohio, fractionation facility.

The resulting products are then transported on truck or rail.

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2021 2020 2019

(Annual Average Amounts)

Consolidated:

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Gathering volumes (Bcf/d) 5.52 4.78 4.29

(1) Annual average Mbbls/d.

(1) 2020 amount has been updated to reflect revised NGL production.

(2) Includes 100 percent of the volumes associated with operated equity-method investments, including the Laurel Mountain Midstream partnership;

and the Bradford Supply Hub and a portion of the Marcellus South Supply Hub within Appalachia Midstream Investments.

Beginning November 18, 2020, we operate Blue Racer.

Blue Racer gathering volumes of 1.38 Bcf/d, plant inlet natural gas volumes of 0.95 Bcf/d, NGL production of 65 Mbbls/d, and NGL equity sales of 6 Mbbls/d have been excluded.

and the Bradford Supply Hub and the Marcellus South Supply Hub within Appalachia Midstream Investments.

Acquisition of UEOM and formation of Northeast JV

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On March 18, 2019, we signed and closed the acquisition of the remaining 38 percent interest in UEOM.

As a result of acquiring this additional interest, we obtained control of and now consolidate UEOM.

(See Note 3 – Acquisitions and Divestitures of Notes to Consolidated Financial Statements).

As a result of acquiring this additional interest, we obtained control of and consolidated UEOM.

(See Note 3 – Acquisitions of Notes to Consolidated Financial Statements).

In June 2019, we contributed our consolidated interests in UEOM and our Ohio Valley midstream business to a newly formed partnership, and we retained 65 percent ownership of, as well as operate and consolidate, the Northeast JV business.

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Through our Appalachia Midstream Investments, we operate 100 percent of and own an approximate average 66 percent interest in the Bradford Supply Hub gathering system and own an approximate average 68 percent interest in the Marcellus South gathering system, together which consist of approximately 1,040 miles of gathering pipeline in the Marcellus Shale region with the capacity to gather 5,330 MMcf/d of natural gas.

The majority of our volumes in the region are gathered from northern Pennsylvania, southwestern Pennsylvania, and the northwestern panhandle of West Virginia in core areas of the Marcellus Shale.

The majority of our volumes in the region are gathered from northern Pennsylvania, southwestern Pennsylvania, and the northwestern

panhandle of West Virginia in core areas of the Marcellus Shale.

We operate the assets under long-term, 100 percent fixed-fee gathering agreements that include significant acreage dedications and, in the Bradford Supply Hub, a cost of service mechanism.

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Laurel Mountain has a long-term, dedicated, volumetric-based fee agreement, with exposure to natural gas prices, to gather the anchor customer’s production in the western Pennsylvania area of the Marcellus Shale.

As of December 31, 2019, we effectively owned a 29 percent indirect interest in Blue Racer through our 58 percent interest in Caiman II, whose primary asset is a 50 percent interest in Blue Racer.

On November 18, 2020, we paid $157 million, net of cash acquired, to acquire an additional 41 percent ownership interest in Caiman II.

We now control and consolidate Caiman II, reporting the 50 percent interest in Blue Racer as an equity-method investment.

We own a 50 percent interest in Blue Racer which is operated by Blue Racer Midstream Holdings, LLC.

Blue Racer is a joint venture to own, operate, develop, and acquire midstream assets in the Utica Shale and certain adjacent areas in the Marcellus Shale.

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Blue Racer also owns the Berne complex in Monroe County, Ohio, with a cryogenic processing capacity of 400 MMcf/d, and NGL and condensate pipelines connecting Natrium to Berne.

Blue Racer provides gathering, processing, and marketing service primarily under percentage of liquids and fixed fee agreements.

Blue Racer provides gathering, processing, and marketing services primarily under percent-of-liquids and fixed-fee agreements.

Gas Gathering, Processing, and Treating Assets

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Permian Texas 112 0.1 100% Permian

Mid-Continent Oklahoma & Texas 2,248 0.9 100% Miss-Lime, Granite Wash, Colony Wash, Arkoma

Mid-Continent Oklahoma & Texas 1,805 0.3 100% Miss-Lime, Granite Wash, Colony Wash

Non-consolidated:

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Opal Opal, WY 1.1 47 100% Southwest Wyoming

Willow Creek Rio Blanco County, CO 0.5 30 100% Piceance

Parachute Garfield County, CO 1.1 6 100% Piceance

Willow Creek Rio Blanco Co., CO 0.5 30 100% Piceance

Parachute Garfield Co., CO 1.0 5 100% Piceance

Non-consolidated:

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_______________

(1) Includes our 60 percent ownership of a gathering system in the Ryan Gulch area with 140 miles of pipeline and 0.2 Bcf/d of inlet capacity, and our 67 percent ownership of a gathering system at Allen Point with 8 miles of pipeline and 0.1 Bcf/d of inlet capacity.

We operate both systems.

We own and operate 100 percent of the balance of the Piceance gathering assets.

(1) Includes 100 percent of the statistics associated with operated equity-method investments.

Marketing Services

We market gas and NGL products to a wide range of users in the energy and petrochemical industries.

The NGL marketing business transports and markets our equity NGLs from the production at our processing plants, and also markets NGLs on behalf of third-party NGL producers, including some of our fee-based processing customers, and the NGL volumes owned by Discovery and RMM.

The NGL marketing business bears the risk of price changes in these NGL volumes while they are being transported to final sales delivery points.

In order to meet sales contract obligations, we may purchase products in the spot market for resale.

Other NGL Operations

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2021 2020 2019

(Annual Average Amounts)

Consolidated:

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________________

(1) 2020 and 2019 volumes reflect the absence of Four Corners assets due to the sale in October 2018.

(2) Annual average Mbbls/d.

(1) Includes 100 percent of the volumes associated with operated equity-method investments, including RMM and Jackalope.

Jackalope was a consolidated entity in first- and second-quarter 2018, an equity-method investment during third- and fourth-quarter 2018 as well as first-quarter 2019, and sold effective with second-quarter 2019.

Sale of Four Corners Assets

In October 2018, we completed the sale of our natural gas gathering and processing assets in the Four Corners area of New Mexico and Colorado.

The system was comprised of 3,742 miles of gathering pipeline with 1.8 Bcf/d of gas gathering inlet capacity and two processing facilities with a combined 0.7 Bcf/d of natural gas processing inlet capacity and 41 Mbbls/d of NGL production capacity.

Jackalope was sold effective second-quarter 2019.

Certain Equity-Method Investments

Overland Pass Pipeline

We also operate and own a 50 percent interest in OPPL.

We operate and own a 50 percent interest in OPPL.

OPPL is capable of transporting 255 Mbbls/d of NGLs and includes approximately 1,035 miles of NGL pipeline extending from Opal, Wyoming, to the Mid-Continent NGL market center near Conway, Kansas, along with extensions into the Piceance and Denver-Julesberg basins in Colorado and the Bakken Shale in the Williston basin in North Dakota.

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Rocky Mountain Midstream

During the third quarter of 2018, our joint venture, RMM, purchased a natural gas and crude oil gathering and natural gas processing business in Colorado’s Denver-Julesburg basin.

As of December 31, 2020, we operate and own 50 percent of RMM.

RMM includes a natural gas gathering pipeline and an approximate 80-mile crude oil transportation pipeline.

It also includes crude oil storage assets.

We operate and own a 50 percent interest in RMM.

RMM includes a natural gas gathering pipeline, an approximate 90-mile crude oil transportation pipeline, and natural gas processing assets in Colorado’s Denver-Julesburg basin.

It also includes crude oil storage and compression assets.

Targa Train 7

We own a 20 percent interest in Targa Train 7, a Mt.

Belvieu fractionation train, which was placed into service in the first quarter of 2020.

Other includes certain previously owned operations, minor business activities that are not reportable segments, as well as corporate operations.

Belvieu, Texas, fractionation train, which was placed into service in the first quarter of 2020.

Gas & NGL Marketing Services

On July 1, 2021, we completed the Sequent Acquisition which is part of our new Gas & NGL Marketing Services business segment.

Our natural gas marketing business provides asset management and the wholesale marketing, trading, storage, and transportation of natural gas for a diverse set of natural gas utilities, municipalities, power generators, and producers and markets natural gas from the production at our upstream properties.

See the Gas and NGL Marketing section of Service Assets, Customers, and Contracts in Item 1.

Business for additional information related to this business segment.

Gas & NGL Marketing Services Operating Statistics

2021 2020 2019

Sales Volumes:

Natural Gas (Bcf/d) (1) 8.09 0.62 0.42

NGLs (Mbbls/d) 400 386 398

________________

(1) Average volumes over the period we owned the operations.

Other includes our upstream operations and minor business activities that are not reportable segments, as well as corporate operations.

REGULATORY MATTERS

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Our intrastate natural gas liquids pipelines providing common carrier service are subject to regulation by various state regulatory agencies.

FERC Updates Certificate Policy Statement and Issues Interim Greenhouse Gas (GHG) Policy Statement

On February 18, 2022, FERC issued two policy statements providing guidance for its pending and future consideration of interstate natural gas pipeline projects.

The first policy statement is an Updated Certificate Policy Statement, which FERC will apply in pending and future certificate proceedings.

This policy statement provides an analytical framework for how FERC will consider whether a project is in the public convenience and necessity and explains that FERC will consider all impacts of a proposed project, including economic and environmental impacts, together.

The second policy statement is an Interim GHG Policy Statement, which sets forth how FERC will assess the impacts of natural gas infrastructure projects on climate change in its reviews under the National Environmental Policy Act and the NGA.

FERC also seeks comment on all aspects of the interim policy statement, including the approach to assessing the significance of the proposed project’s contribution to climate change.

While the guidance is subject to revision based on the comments received, FERC will begin applying the framework established in this policy statement to pending cases.

Pipeline Safety

Our gas pipelines are subject to the Natural Gas Pipeline Safety Act of 1968, as amended, the Pipeline Safety Improvement Act of 2002, the Pipeline Safety, Regulatory Certainty, and Jobs Creation Act of 2011 (Pipeline Safety Act), and the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2016, which regulate safety requirements in the design, construction, operation, and maintenance of interstate natural gas transmission facilities.

Our gas pipelines are subject to the Natural Gas Pipeline Safety Act of 1968, as amended, the Pipeline Safety Improvement Act of 2002, the Pipeline Safety, Regulatory Certainty, and Jobs Creation Act of 2011 (Pipeline Safety Act), and the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act (PIPES Act) of 2016 and 2020, which regulate safety requirements in the design, construction, operation, and maintenance of interstate natural gas transmission facilities.

The United States Department of Transportation Pipeline and Hazardous Materials Safety Administration (PHMSA) administers federal pipeline safety laws.

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To ensure compliance with these provisions, PHMSA performs pipeline safety inspections and has the authority to initiate enforcement actions.

In 2016, PHMSA published a proposed rulemaking that would impose new or more stringent requirements for certain natural gas pipelines including, expanding certain of PHMSA’s current regulatory safety programs for natural gas lines in high-population areas (also known as moderate consequence areas (MCAs)) that do not qualify as high-consequence areas (HCAs) and requiring maximum allowable operating pressure (MAOP) validation through re-verification of all historical records for pipelines in service, which may require natural gas pipelines installed before 1970 (previously excluded from certain pressure testing obligations) to be pressure tested.

However, PHMSA has since decided to split this proposed rule (Mega Rule), into three separate rulemaking proceedings.

The first of these three rulemakings, relating to onshore gas transmission pipelines, was published as a final rule on October 1, 2019, and imposes numerous requirements, including MAOP reconfirmation, the periodic assessment of additional pipeline mileage outside of HCAs, the reporting of exceedances of MAOP, and the consideration of seismicity as a risk factor in integrity management.

In October 2019, PHMSA published a final rulemaking imposing new or more stringent requirements for certain natural gas pipelines including, expanding certain of PHMSA’s current regulatory safety programs for natural gas lines in high-population areas (also known as moderate consequence areas (MCAs)) that do not qualify as high-consequence areas (HCAs) and requiring maximum allowable operating pressure (MAOP) validation through re-verification of all historical records for pipelines in service, which may require natural gas pipelines installed before 1970 (previously excluded from certain pressure testing obligations) to be pressure tested.

PHMSA split this rule (Mega Rule), into three separate rulemaking proceedings.

The first of these three rulemakings, relating to onshore gas transmission pipelines, imposes numerous requirements, including MAOP reconfirmation, material and component verification, the periodic assessment of additional pipeline mileage outside of HCAs, the reporting of exceedances of MAOP, and the consideration of seismicity as a risk factor in integrity management.

of these three rulemakings contains new repair requirements for HCAs and non-HCAs, and requires operators to inspect pipelines within 72 hours of extreme weather events or natural disasters.

Operators will have to install or enhance leak detection systems, and make modifications to their pipeline systems to accommodate inline inspection tools.

The third of these three rulemakings provides PHMSA with the authority to issue emergency orders to address imminent hazards, such as unsafe conditions or faulty components used on pipes.

In accordance with the final rule, we have developed new procedures and updated our existing pipeline safety program to facilitate meeting all requirements within the time frames stated.

The remaining rulemakings comprising the Mega Rule are expected to be issued in 2021 and will include revised pipeline repair criteria as well as more stringent corrosion control requirements.

PHMSA also published new or more stringent rules for onshore hazardous liquids transportation lines in October 2019 requiring integrity assessments on all onshore pipe that accommodate inline inspection tools.

We are also expecting additional regulations due to new pipeline safety legislation finalized in December 2020 that reauthorized PHMSA pipeline safety programs.

The new legislation includes mandates for PHMSA to publish final rules for advanced leak detection for gas pipelines, additional repair criteria for gas and hazardous liquids pipelines, updated operating and maintenance standards requirements applicable to large-scale liquefied natural gas facilities, certain Coastal Waters and Coastal Beaches to be designated as USA ecological resources for purposes of

determining whether a hazardous liquid pipeline is in a high consequence area, and the gas gathering portion of the proposed Mega Rule.

We are also expecting additional regulations due to the PIPES Act of 2020 that became law in December 2020.

The PIPES Act of 2020 reauthorized PHMSA’s pipeline safety program through September 2023.

The new legislation includes mandates for PHMSA to publish final rules for advanced leak detection for gas pipelines, additional repair criteria for gas and hazardous liquids pipelines, updated operating and maintenance standards requirements applicable to large-scale liquefied natural gas facilities, and certain coastal waters and coastal beaches to be designated as unusually sensitive areas ecological resources for purposes of determining whether a hazardous liquid pipeline is in a high consequence area.

In November 2021, in accordance with the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, PHMSA issued a final rule for onshore gas gathering pipelines.

All gas gathering pipelines, including previously unregulated pipelines, will be subject to PHMSA’s annual and incident reporting requirements.

The rule limits the use of “incidental gathering pipelines” to 10 miles in length or less.

The rule also creates a new category of regulated gas gathering pipelines that are located in rural locations and will be subject to certain reporting and safety standards.

The rule adds 400,000 miles of gas gathering lines under PHMSA jurisdiction, including approximately 5,400 miles and 4,500 miles of our regulated and unregulated pipelines, respectively.

New regulations adopted by PHMSA may impose more stringent requirements applicable to integrity management programs and other pipeline safety aspects of our operations, which could cause us to incur increased capital and operating costs and operational delays.

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Management considers the costs associated with compliance with the rule to be prudent costs incurred in the ordinary course of business.

Cybersecurity Matters

The Transportation Security Administration (TSA) issued Security Directive Pipeline-2021-01 (Security Directive 1) on May 26, 2021, which required that owners/operators of critical pipelines to (1) report cybersecurity incidents to the Cybersecurity and Infrastructure Agency (CISA) within 12 hours;

(2) appoints a cybersecurity coordinator to coordinate with TSA and CISA;

and (3) conduct a self-assessment of cybersecurity practices, identify any gaps, and develop a plan and timeline for remediation.

We fully complied with the requirements of Security Directive 1 within the timeframe required.

On July 19, 2021, the TSA issued Security Directive Pipeline-2021-02 (Security Directive 2), which required owners/operators of critical pipelines to implement additional cybersecurity measures to prevent disruption and degradation to their infrastructure in response to a purported ongoing threat.

We have evaluated the impacts of Security Directive 2 and made significant progress towards compliance.

We are coordinating with the TSA to establish action plans and timelines to remain in compliance with Security Directive 2.

See Part I, Item 1A.

“Risk Factors” — “A breach of our information technology infrastructure, including a breach caused by a cybersecurity attack on us or third parties with whom we are interconnected, may interfere with the safe operation of our assets, result in the disclosure of personal or proprietary information, and harm our reputation.”

State Gathering Regulations

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Although the applicable state regulations vary widely, they generally require that pipeline rates and practices be reasonable and nondiscriminatory, and may include provisions covering marketing, pricing, pollution, environment, and human health and safety.

Some states, such as New York, have specific regulations pertaining to the design, construction, and operations of gathering lines within such state.

Some states, such as New York and Ohio, have specific regulations pertaining to the design, construction, and operations of gathering lines within such state.

Intrastate Liquids Pipelines in the Gulf Coast

Our intrastate liquids pipelines in the Gulf Coast are regulated by the Louisiana Public Service Commission, the Texas Railroad Commission, and various other state and federal agencies.

Our intrastate liquids pipelines in the Gulf Coast are regulated by the Louisiana Department of Natural Resources, the Texas Railroad Commission, and various other state and federal agencies.

These pipelines are also subject to the liquid pipeline safety and integrity regulations discussed above since both Louisiana and Texas have adopted the integrity management regulations defined in PHMSA.

Our offshore gas and liquids pipelines located on the outer continental shelf are subject to the Outer Continental Shelf Lands Act, which provides in part that outer continental shelf pipelines “must provide open and nondiscriminatory access to both owner and non-owner shippers.”

See Part II, Item 8.

Financial Statements and Supplementary Data — Note 19 – Contingent Liabilities and Commitments of Notes to Consolidated Financial Statements for further details on our regulatory matters.

For additional information regarding regulatory matters, please also refer to Part 1, Item 1A.

“Risk Factors” — “The

operation of our businesses might be adversely affected by regulatory proceedings, changes in government regulations or in their interpretation or implementation, or the introduction of new laws or regulations applicable to our businesses or our customers,” and “The natural gas sales, transportation, and storage operations of our gas pipelines are subject to regulation by the FERC, which could have an adverse impact on their ability to establish transportation and storage rates that would allow them to recover the full cost of operating their respective pipelines and storage assets, including a reasonable rate of return.

See Part I, Item 1A.

“Risk Factors” — “The operation of our businesses might be adversely affected by regulatory proceedings, changes in government regulations or in their interpretation or implementation, or the introduction of new laws or regulations applicable to our businesses or our customers,” and “The natural gas sales, transportation, and storage operations of our gas pipelines are subject to regulation by the FERC, which could have an adverse impact on their ability to establish transportation and storage rates that would allow them to recover the full cost of operating their respective pipelines and storage assets, including a reasonable rate of return.

ENVIRONMENTAL MATTERS

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Financial Statements and Supplementary Data — Note 19 – Contingent Liabilities and Commitments of Notes to Consolidated Financial Statements.

Gas Pipeline Business

The market for supplying natural gas is highly competitive and new pipelines, storage facilities, and other related services are expanding to service the growing demand for natural gas.

Additionally, pipeline capacity in many growing natural gas supply basins is constrained causing competition to increase among pipeline companies as they strive to connect those basins to major natural gas demand centers.

In our business, we predominately compete with major intrastate and interstate natural gas pipelines.

In the last few years, local distribution companies have also started entering into the long-haul transportation business through joint venture pipelines.

The principle elements of competition in the interstate natural gas pipeline business are based on rates, reliability, quality of customer service, diversity of supply, and proximity to customers and market hubs.

Significant entrance barriers to build new pipelines exist, including federal and growing state regulations and public opposition against new pipeline builds, and these factors will continue to impact potential competition for the

foreseeable future.

However, we believe our past success in working with regulators and the public, the position of our existing infrastructure, established strategic long-term contracts, and the fact that our pipelines have numerous receipt and delivery points along our systems provide us a competitive advantage, especially along the eastern seaboard and northwestern United States.

Midstream Business

Competition for natural gas gathering, processing, treating, transporting, and storing natural gas continues to increase as production from shales and other resource areas continues to grow.

Gathering and Processing

Competition for natural gas gathering, processing, treating, transporting, and storing natural gas as well as NGLs transportation, fractionation, and storage continues to increase as production from shales and other resource areas continues to grow.

Our midstream services compete with similar facilities that are in the same proximity as our assets.

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We believe our significant presence in traditional prolific supply basins, our solid positions in growing shale plays, our expertise and reputation as a reliable operator, and our ability to offer integrated packages of services position us well against our competition.

Regulated Interstate Natural Gas Transportation and Storage

The market for supplying natural gas is highly competitive and new pipelines, storage facilities, and other related services are expanding to service the growing demand for natural gas.

In our business, we predominately compete with major intrastate and interstate natural gas pipelines.

In the last few years, local distribution companies have also started entering into the long-haul transportation business through

joint venture pipelines.

The principle elements of competition in the interstate natural gas pipeline business are based on capacity available, rates, reliability, quality of customer service, diversity of supply, and proximity to customers and market hubs.

We face competition in a number of our key markets and we compete with other interstate and intrastate pipelines for deliveries to customers who can take deliveries at multiple points.

Natural gas delivered on our system competes with alternative energy sources used to generate electricity such as hydroelectric power, coal, fuel oil, and nuclear.

Future demand for natural gas within the power sector could be increased by regulations limiting or discouraging coal use or could be adversely affected by laws mandating or encouraging renewable power sources.

Energy Management and Marketing Services

Our Gas & NGL Marketing Services segment competes with national and regional full-service energy providers, producers and pipelines marketing affiliates or other marketing companies that aggregate commodities with transportation and storage capacity.

For additional information regarding competition for our services or otherwise affecting our business, please refer to Part 1, Item 1A.

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When a safety hazard is recognized, every employee is empowered to stop work activities and make it right.

Safety and environmental-focused goals and related metrics comprise 10 percent of our annual incentive program for employees, providing an increased focus on activities that help us meet enterprise safety commitments.

For 2019, these metrics included our Near Miss to Incident Ratio, emphasizing our safety focus on hazard recognition and reinforcing the importance of incident prevention, and our Late Post Startup Deliverables metric, emphasizing the importance of completing all post startup deliverables associated with newly completed projects.

As disclosed in our 2020 Proxy Statement, we exceeded our targets for these safety metrics in 2019, achieving a Near Miss to Incident ratio of 13.98:1, versus a target between 9:1 and 10:1, and less than 1 percent of Late Post Startup Deliverables, versus a target between 3 percent and 4 percent.

For 2020, these metrics include our High Potential Near Miss to Incident Ratio, again emphasizing our safety focus on high potential hazard recognition and reinforcing the importance of incident prevention, and our environmental metric Loss of Primary Containment, focused on reducing greenhouse gases and considered a leading indicator to more significant process safety incidents.

Workforce Health & Development

Our employees are our most valued resource and the driving force behind our reputation as a safe, reliable company that does the right thing, every time.

For 2020 and 2021, safety and environmental-focused goals and related metrics comprise 10 percent of our annual incentive program for employees, providing an increased focus on activities that help us meet enterprise safety commitments.

For 2020 and 2021, these metrics include our High Potential Near Miss to Incident Ratio, emphasizing our safety focus on high potential hazard recognition and reinforcing the importance of incident prevention, and our environmental metric Loss of Primary Containment, focused on reducing greenhouse gases and considered a leading indicator to more significant process safety incidents.

For 2021, both our high potential near miss to incident ratio and loss of primary containment events exceeded their respective established targets.

For 2022, in addition to the above, we added a third goal related to methane emission reductions.

These three goals now comprise 15 percent of our annual incentive program for employees.

Workforce Health, Engagement, and Development

Our employees are our most valued resource, are instrumental in our mission to safely deliver products that fuel the clean energy economy, and are the driving force behind our reputation as a safe, reliable company that does the right thing, every time.

Cultivating a healthy work environment increases productivity and promotes long-term value creation.

We provide a comprehensive total rewards program that includes base salary, an all-employee annual incentive program, retirement benefits, and health benefits, including a wellness program.

We provide a comprehensive total rewards program that includes base salary, an all-employee annual incentive program, retirement benefits, and health benefits, including wellness and employee assistance programs.

We provide employees with company-paid life insurance, disability coverage, and paid parental leave for both birth and non-birth parents.

Our annual incentive program is a key component of our commitment to a performance culture focused on recognizing and rewarding high performance.

In order to attract and retain top talent, we create an environment where employees feel fulfilled and supported in their personal and professional development.

In order to attract and retain top talent, we create and are committed to maintaining a safe, inclusive workplace where employees feel valued, heard, respected, and supported in their personal and professional development.

We offer robust corporate and technical training programs to support the professional development of our employees and add long-term value to our business.

Additionally, we support strong employee engagement by encouraging open dialogue regarding professional development.

Additionally, we support strong employee engagement by encouraging open dialogue regarding professional development and succession planning.

Performance is measured considering both the achieved results associated with attaining annual goals and observable skills and behaviors based on our defined competencies that contribute to workplace effectiveness and career success.

Additionally, we are committed to strengthening the communities where we operate through philanthropic giving and volunteerism.

We support Science, Technology, Engineering, and Math education initiatives, environmental conservation and first responder efforts, and the work of United Way agencies across the United States.

The Compensation and Management Development Committee of our Board of Directors oversees the establishment and administration of our compensation programs, including incentive compensation and equity-based plans.

In response to the ongoing impact of COVID-19, we took action to safeguard the health and safety of our employees, including allowing our employees to work remotely where possible, while implementing safety guidance and best practices designed to protect the health of those entering our facilities.

In response to the ongoing impact of coronavirus, including its variants (COVID-19), we took action to safeguard the health and safety of our employees, including allowing our employees to work remotely where possible, while implementing safety guidance and best practices designed to protect the health of those entering our facilities.

Diversity & Inclusion

We encourage a diverse and inclusive workforce, helping our employees reach their full potential and promoting innovation.

By embracing differences—whether race, gender, nationality, ability, orientation, or generation—we bring the best out of our people to drive business growth and long-term success.

To support networking and professional development opportunities, we endorse employee resource groups, which allow more inclusivity by offering an opportunity for employees to network, gain development, and provide input to leaders on specific needs.

We strive for diverse representation at all levels through our talent management practices and employee development programs as we are committed to helping all employees develop.

Diversity metrics are reported monthly to our management team.

We also have a Diversity and Inclusion Council, chaired by our chief executive officer and including members of the executive officer team, organizational and operational leaders, and individual employees, to promote policies, practices, and procedures that support the growth of a high-performing workforce where all individuals can achieve their full potential.

The council serves as the governing body over enterprise diversity and inclusion initiatives.

Our Board of Directors includes 12 independent members, one-third of which are women.

As part of the director selection and nominating process, the Governance and Sustainability Committee annually assesses the

Board’s diversity in such areas as geography, race, gender, ethnicity, and age.

We are committed to creating an inclusive culture, where diverse differences are embraced and employees feel valued, welcomed, appreciated, and compelled to reach their full potential.

We believe that inclusion fosters innovation, collaboration, and drives business growth and long-term success.

To create a culture of inclusion, we embrace, appreciate, and fully leverage the diversity within our teams, including gender, race and ethnicity, life experiences, thoughts, perspectives, and anything that makes us different from one another.

We believe that incorporating our many differences into a team of people who are working toward the same goal gives us a competitive advantage.

To create space for employees to share personal experiences and perspectives, and to appreciate and celebrate what makes people different, we offer Employee Resource Groups (ERGs).

These groups are employee-led and

based on similar interests and experiences, represent diverse communities and their allies, and are open to everyone.

ERG members participate in community events, volunteer, lend professional and personal support to one another, and promote inclusion across the company.

They also provide input to the leadership team.

We are committed to helping all employees develop and succeed.

We strive for diverse representation at all levels of the organization through our talent management practices and employee development programs, including required baseline diversity and inclusion training for all leaders across the company.

Diversity metrics are reported monthly to our management team to identify trends and opportunities for improvement.

Our Diversity and Inclusion Council - chaired by our chief executive officer and including members of the executive officer team, organizational and operational leaders, and individual employees - promotes policies, practices, and procedures that support the growth of a high-performing workforce where all individuals can achieve their full potential.

The council serves as the governing body over enterprise diversity and inclusion initiatives, including a quarterly candid conversation meeting for all employees, 10 active ERGs, and annual awards that recognize an outstanding leader and an individual contributor who champion inclusion.

As of December 31, 2021, our Board of Directors includes 12 members, 11 of whom are independent members and approximately one-quarter of which are women.

As part of the director selection and nominating process, the Governance and Sustainability Committee annually assesses the Board’s diversity in areas such as geography, gender, race and ethnicity, and age.

We strive to maintain a board of directors with diverse occupational and personal backgrounds.

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What changed 10-K

Item 1. Business