ONEOK Partners Plans Major Growth Project Investments

September 2012, Vol. 239 No. 9

ONEOK Partners, L.P said it plans to invest approximately $980 million to $1.1 billion between now and 2014 to:

* Build a 75,000 natural gas liquids (NGL) fractionator, MB-3, at Mont Belvieu, TX, and related infrastructure;
* Build a 100 MMcf/d natural gas processing facility – the Garden Creek II plant – in eastern McKenzie County, ND, in the Bakken Shale in the Williston Basin, and related infrastructure;
* Increase capacity on the Bakken NGL Pipeline to 135,000 bpd from 60,000 bpd; and
* Build a 40,000-bpd ethane/propane (E/P) splitter at Mont Belvieu.

“These projects reflect our continuing commitment to provide natural gas processing, and NGL fractionation and transportation capacity to producers actively developing shale plays within our operating footprint,” said Pierce H. Norton, executive vice president and COO of ONEOK Partners. 

Supply commitments, which are in various stages of negotiation for the expanded pipeline and new fractionator, will be anchored by NGL production from the partnership’s natural gas processing plants and from third-party processors. The Garden Creek II plant will be supported by acreage dedications.

The new MB-3 fractionator is expected to cost $375-415 million and will be the partnership’s third fractionator located in Mont Belvieu. MB-3 is expected to be in service in the fourth quarter of 2014 and will supplement the partnership’s 80%-owned, 160,000-bpd MB-1 fractionator, as well as the partnership’s 100%-owned, 75,000-bpd MB-2 fractionator, which is under construction and is scheduled for completion in mid-2013.

This investment also includes $150-160 million to expand the partnership’s Mont Belvieu NGL storage facilities, existing Oklahoma NGL gathering system, and the existing Arbuckle and Sterling II pipelines.

“These investments to grow our NGL infrastructure, combined with the completion of our MB-2 fractionator, will enable us to better meet the growing needs of our customers in the Mid-Continent and Gulf Coast regions,” Norton added.

ONEOK Partners owns an NGL system in the Mid-Continent and Gulf Coast, which includes fractionators and storage in Mont Belvieu; Bushton, Conway and Hutchinson, KN; and Medford, OK. It also owns interstate natural gas liquids distribution pipelines between Conway and Mont Belvieu, and NGL and refined petroleum products distribution pipelines that connect its Mid-Continent NGL infrastructure to Midwest markets, including Chicago. 

The partnership is investing $610-810 million to construct a 570-mile, 16-inch NGL pipeline – the Sterling III Pipeline – expected to be completed in late 2013, to transport either unfractionated NGLs or NGL purity products from the Mid-Continent region to the Texas Gulf Coast, with an initial capacity of 193,000 bpd and the ability to expand to 250,000 bpd; and to reconfigure its existing Sterling I and II NGL distribution pipelines to transport either unfractionated NGLs or NGL purity products.

The Garden Creek II plant and related infrastructure, including expansions and upgrades to its existing natural gas gathering and compression, is expected to cost $310-345 million and is expected to be in service during the third quarter of 2014. The natural gas processing facility will be built adjacent to the partnership’s existing Garden Creek natural gas processing plant, which was completed last December. 

“The announcement of the Garden Creek II plant and related infrastructure increases our Bakken-related investments to approximately $3.6 billion to $4.2 billion for natural gas-, NGL- and crude-oil-related infrastructure projects between now and 2015,” said Norton. “These investments will enable us to continue meeting the growing needs of Bakken producers and keep pace with increased drilling activities.”

The partnership’s previously announced Stateline I and Stateline II natural gas processing plants are expected to be in service during the third quarter of 2012 and the first half of 2013, respectively. When completed, the combined natural gas processing capacities of the Garden Creek II plant, the Stateline I and II plants, and the existing Garden Creek and Grasslands natural gas processing facilities, will be 490 MMcf/d in the Williston Basin.

ONEOK Partners is the largest independent operator of natural gas gathering and processing facilities in the Williston Basin, with a natural gas gathering system of more than 5,000 miles and acreage dedications of more than 2.7 million acres. 

Pipeline Expansion
The partnership will invest $100 million to install additional pump stations on the Bakken NGL Pipeline to increase its capacity to 135,000 bpd from an initial capacity of 60,000 bpd. The expansion is expected to be completed in the third quarter of 2014. The Bakken NGL Pipeline is a 525- to 615-mile NGL pipeline that will transport unfractionated NGLs produced from the Bakken Shale in the Williston Basin to the partnership’s 50%-owned Overland Pass Pipeline, a 760-mile NGL pipeline extending from southern Wyoming to Conway, KN. The Bakken NGL Pipeline is under construction and is expected to be in service during the first half of 2013.

In Mont Belvieu, the partnership will invest $45 million to install a 40,000-bpd E/P splitter at its storage facility to split E/P mix into purity ethane in order to meet the growing needs of petrochemical customers. The plant will be capable of producing 32,000 bpd of purity ethane and 8,000 bpd of propane and is expected to be in service during the second quarter of 2014.

Other Capital Projects
The partnership now has announced total investments of $5.7-6.6 billion through 2015 for infrastructure growth projects related to natural gas gathering and processing, NGLs and crude oil, which includes the projects described above. 

These projects consist of $1.8-1.9 billion for natural gas gathering and processing projects; $2.4-2.9 billion for NGL projects; and $1.5-1.8 billion for crude oil projects. 

ONEOK says the partnership has a $2 billion-plus backlog of unannounced growth projects that it continues to evaluate. Additional projects included in this backlog will be announced when sufficient supply commitments are completed.

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