ONEOK Partners to Build New Gulf Coast Natural Gas Liquids Pipeline

May 2011, Vol. 238 No. 5


ONEOK Partners, L.P. announced plans May 2 to invest approximately $910 million to $1.2 billion between now and late 2013 in order to:
• Construct a new 570-plus-mile, 16-inch diameter natural gas liquids (NGL) pipeline, the Sterling III Pipeline, to transport either unfractionated NGLs or NGL purity products from the Mid-Continent region to the Texas Gulf Coast;
• Reconfigure its existing Sterling I and II NGL distribution pipelines to transport either unfractionated NGLs or NGL purity products; and
• Build a new 75,000 barrel-per-day (bpd) NGL fractionator, MB-2, at Mont Belvieu, Texas.

“These projects will accommodate the growing NGL supplies in the Mid-Continent and elsewhere and help alleviate the infrastructure constraints between the Mid-Continent and Gulf Coast markets, while meeting the requirements of natural gas processors and NGL customers,” said Terry K. Spencer, ONEOK Partners chief operating officer.

Supply commitments, which are in various stages of negotiation for both the new pipeline and fractionator, will be anchored by NGL production from third-party processors.

The new Sterling III Pipeline will cost approximately $610 million to $810 million and will have an initial capacity to transport 193,000 bpd of either unfractionated NGLs or NGL purity products from the partnership’s NGL infrastructure at Medford, Okla., to its storage and fractionation facilities at Mont Belvieu. Once complete, it will double the partnership’s current pipeline capacity between Medford and Mont Belvieu.

The investment also includes reconfiguring the existing Sterling I and II pipelines – which currently distribute NGL purity products between the Mid-Continent and Gulf Coast NGL market centers – to transport either unfractionated NGLs or NGL purity products.

“Building this new pipeline and reconfiguring our existing Sterling I and II pipelines give us the flexibility to transport and optimize the flow of unfractionated or purity NGLs through all three pipelines,” Spencer said. “These pipeline projects, along with our previously announced Arbuckle Pipeline and Sterling I Pipeline expansions, further enhance our ability to transport NGLs – either unfractionated or purity products – to Gulf Coast markets.”

The Sterling III Pipeline will complement the partnership’s existing Sterling I and II pipelines, and when operational all three Sterling pipelines will be capable of transporting either unfractionated NGLs or purity NGL products. Construction is expected to begin in early 2013, following receipt of necessary permits and the acquisition of right of way; it is anticipated that a portion of the existing right of way on the Sterling I and II pipelines can be used. Completion is scheduled in late 2013. With additional pump stations, the Sterling III Pipeline’s capacity can be expanded to 250,000 bpd.

The Sterling III Pipeline will traverse the NGL-rich Woodford Shale that is currently under development, as well as provide transportation capacity for NGL production from the growing Cana-Woodford Shale and Granite Wash, where it can gather unfractionated NGLs from the new natural gas processing plants that are being built as a result of increased drilling activity in these areas.

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