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ONEOK extends NGL and natural gas infrastructure

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Hydrocarbon Engineering,

ONEOK, Inc. has announced plans to invest approximately US$2.3 billion on its NGL and natural gas infrastructure between now and 2020.

The company plans to construct the following:

  • A new 400 000 bpd natural gas liquids (NGL) pipeline – the Arbuckle II Pipeline – which will create additional NGL transportation capacity between ONEOK's extensive Mid-Continent infrastructure in Oklahoma and the company's existing NGL facilities in Mont Belvieu, Texas, US.
  • A new 125 000 bpd NGL fractionator – MB-4 – in Mont Belvieu, Texas, and related infrastructure.
  • A new 200 million ft3/d natural gas processing facility – the Demicks Lake plant and related infrastructure – in the Williston Basin.

These projects are expected to generate adjusted earnings before interest, taxes, depreciation and amortisation (adjusted EBITDA) multiples of four to six times. Following the company's recently completed equity issuances totalling approximately US$1.6 billion, project funding is expected to come from cash generated from operations and short- and long-term borrowings. ONEOK does not expect to issue additional equity in 2018 and well into 2019.

Arbuckle II Pipeline and MB-4

The approximately 530-mile, 24 in. and 30 in. dia. Arbuckle II Pipeline is expected to cost approximately US$1.36 billion and will have an initial capacity to transport up to 400 000 bpd of unfractionated NGLs originating across ONEOK's supply basins and extensive NGL gathering system to the company's storage and fractionation facilities at Mont Belvieu. The Arbuckle II Pipeline is expected to be completed in 1Q20. The pipeline will have the capability to be expanded up to 1 million bpd with additional pump facilities, which could more than double ONEOK's current capacity between the Mid-Continent and Gulf Coast.

The new MB-4 fractionator and related infrastructure, which includes additional NGL storage capacity in Mont Belvieu, are expected to cost approximately $575 million and be completed in the 1Q20. ONEOK’s total NGL fractionation capacity will increase to 965 000 bpd following the completion of MB-4.

The initial capacity of the Arbuckle II Pipeline is more than 50% contracted, and MB-4 is fully contracted. Both are anchored by long-term contracts with terms ranging between 10 to 20 years.

Demicks Lake plant and related infrastructure

The Demicks Lake natural gas processing plant and related field infrastructure are expected to cost a total of approximately US$400 million and be completed in 4Q19. The plant will be built in McKenzie County, North Dakota, which is in the core area of the Williston Basin. The plant is supported by acreage dedications with primarily fee-based contracts.

The Demicks Lake plant is expected to contribute additional NGL volumes to the company’s NGL gathering system and natural gas volumes to its 50% owned Northern Border Pipeline.

ONEOK's Williston Basin natural gas processing capacity will increase to more than 1.2 billion ft3/d following the completion of the plant.

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