ONEOK Plans $1.8 Billion Crude Line, $160 Million Gas Gathering System

April 2012, Vol. 239 No. 4

ONEOK Partners L.P. plans to invest $1.5 -1.8 billion through 2015 to build a 1,300-mile crude oil pipeline with the capacity to transport 200,000 bpd.

The Bakken Crude Express Pipeline will transport light-sweet crude oil from the Bakken Shale in the Williston Basin in North Dakota to the Cushing, OK hub.

“As producers continue to aggressively develop crude oil from wells in the Bakken Shale, more crude oil pipeline takeaway capacity will be required,” said Terry Spencer, ONEOK Partners president.

“It also represents our entry into the crude oil transportation business and utilizes our existing core capabilities of transporting and storing natural gas, natural gas liquids and refined petroleum products,” he said. “Many supply commitments under negotiation are with the same producers we serve in the Williston Basin.”

Commitments for the proposed pipeline are in various stages of negotiation. Following receipt of all necessary permits and compliance with customary regulatory requirements, construction is expected to begin in late 2013 or early 2014 and be completed by early 2015. Based on commitments prior to construction, the capacity can be increased.

The proposed pipeline route will be well-positioned to transport crude oil production from the Niobrara Shale. The route is expected to parallel more than 80% of the partnership’s existing and planned natural gas liquids pipelines.

ONEOK Partners also plans to invest another $140-160 million to construct a 270-mile natural gas gathering system and related infrastructure in Divide County, ND.
The system, expected to be completed in the second half of 2013, will gather and deliver natural gas from producers in the Bakken Shale in the Williston Basin to the partnership’s 100 MMcf/d Stateline II natural gas processing facility in western Williams County, ND. The Stateline II plant is expected to be in service in early 2013. The partnership has secured long-term supply commitments from producers structured with percent-of-proceeds and fee-based components.

With completion of the Divide system, the partnership will have installed the necessary infrastructure sufficient to fill all four of its processing plants in the Bakken Shale and Three Forks regions.

The partnership is investing $2.8-3.5 billion through 2014 in growth projects. It is investing $1.6-2 billion in projects related to the Bakken Shale that include the 500-mile NGL pipeline, the Bakken Pipeline; and three 100 MMcf/d natural gas processing facilities.

The partnership has a $1 billion-plus backlog of unannounced growth projects that will be announced when sufficient supply commitments are completed.

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