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Released February 06, 2015 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Efforts by North Dakota regulators to reduce natural gas flaring are creating new business opportunities for ONEOK Partners LP (NYSE:OKS) (Tulsa, Oklahoma) and its corporate parent, ONEOK Incorporated (NYSE:OKE) (Tulsa).
A year ago, North Dakota oil & gas production companies were flaring more than 35% of the natural gas they produced, often because they lacked adequate gas gathering systems or processing plant capacity. But as new regulations from the North Dakota Industrial Commission (NDIC) (Bismarck, North Dakota) began taking effect in late 2014, gas flaring fell sharply, to about 25% in November, the company told investors in Houston last month. The NDIC rules call for reducing flaring to 15% of gas production by early 2016, and to 10% by year-end 2020.
Click on image at right to see a graphic on North Dakota's gas production and gas flaring.
Good public policy has meant good business for ONEOK Partners, which operates gas gathering and processing systems, gas pipelines, natural gas liquids (NGL) processing plants, and pipelines in the Williston and Powder River basins and the Midcontinent region. North Dakota's efforts to reduce gas flaring means more gas must be captured at the wellhead, placed into gathering systems, processed and transported via pipeline--all businesses where ONEOK Partners operates.
In North Dakota's Williston Basin, ONEOK Partners is developing four major capital projects this year and next, with a total investment value of between $1.4 billion and $1.9 billion, ONEOK officials told attendees at U.S. Capital Advisors Midstream Access Day, held January 27 in Houston. The projects include:
That would be a robust slate of projects under development for most companies, but ONEOK Partners also is developing $265 million to $355 million of infrastructure projects in Wyoming's Powder River Basin. The largest of these projects is the Bronco Natural Gas Processing Plant in Converse County, Wyoming, a $170 million to $245 million project, which is scheduled to begin operating in the third quarter of 2016. ONEOK Partners also is investing about $1 billion over the next two years to expand its NGL takeaway capacity in the Williston and Power River basins.
In Oklahoma, ONEOK Partners has between $365 million and $470 million of midstream projects under development. The largest of these is the Marlow Knox Natural Gas Processing Plant, which will add about 200 million cubic feet of gas-processing capacity when it comes online by the end of next year.
In the Permian Basin, ONEOK Partners is in the process of integrating the 2,600 miles of recently purchased NGL gathering pipelines into its existing NGL asset base. ONEOK Partners bought those assets late last year from Chevron (NYSE:CVX) (San Ramon, California) for $800 million. ONEOK Partners is planning on an additional $500 million of growth investments in the Permian over the next five years.
"Acquiring these natural gas liquids pipelines allows us to continue to serve producers in the Permian Basin and other multiple high-producing, NGL-rich basins, including the Williston Basin, the Powder River Basin, and the Cana-Woodford and SCOOP [Southern Central Oklahoma Oil Province] plays in Oklahoma," said ONEOK Partners President and Chief Executive Terry K. Spencer in a statement when his company acquired the Chevron NGL assets. ONEOK Partners' "presence in the Permian Basin now is significantly stronger, and this acquisition establishes a new geographic region for natural gas liquids volume growth," he added.
ONEOK Partners also wants to build a 208-mile intrastate gas pipeline in Texas to serve growing demand for gas in El Paso, Texas, and Mexico. If constructed, the project--as yet unnamed--will transport between 500 million and 600 million cubic feet of gas per day (MMcf/d) from the Waha hub area to a delivery point near San Elizario, Texas. The project has a total investment value of between $450 million and $550 million.
By yearend 2015, ONEOK Partners plans to double the volume of gas it gathers, compared to 2010 levels. Also by yearend 2015, ONEOK Partners plans to more than double the volume of gas it processes, compared with 2010. The company also expects continued growth in the volume of NGLs it gathers and processes.
In addition to the $2.4 billion to $3 billion of capital projects planned for 2015 and 2016, ONEOK officials told investors last month it had an additional $4 billion to $5 billion of unannounced growth projects under development for the post-2016 period.
"ONEOK Partners and ONEOK Incorporated are doing a very nice business gathering, processing and transporting the rising volumes of natural gas and NGLs that are being produced because of the shale revolution," said Jesus Davis, Industrial Info's vice president of research for the Oil & Gas Production, Pipelines and Terminals industries. "The volumes of gas and NGLs they gather, process or transport could be impacted by low commodity prices, but that risk seems manageable. As the U.S. increases its use of gas and NGLs, and grows its export volumes of those commodities, we see a lot of benefits accruing to ONEOK Partners."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
A year ago, North Dakota oil & gas production companies were flaring more than 35% of the natural gas they produced, often because they lacked adequate gas gathering systems or processing plant capacity. But as new regulations from the North Dakota Industrial Commission (NDIC) (Bismarck, North Dakota) began taking effect in late 2014, gas flaring fell sharply, to about 25% in November, the company told investors in Houston last month. The NDIC rules call for reducing flaring to 15% of gas production by early 2016, and to 10% by year-end 2020.
Click on image at right to see a graphic on North Dakota's gas production and gas flaring.Good public policy has meant good business for ONEOK Partners, which operates gas gathering and processing systems, gas pipelines, natural gas liquids (NGL) processing plants, and pipelines in the Williston and Powder River basins and the Midcontinent region. North Dakota's efforts to reduce gas flaring means more gas must be captured at the wellhead, placed into gathering systems, processed and transported via pipeline--all businesses where ONEOK Partners operates.
In North Dakota's Williston Basin, ONEOK Partners is developing four major capital projects this year and next, with a total investment value of between $1.4 billion and $1.9 billion, ONEOK officials told attendees at U.S. Capital Advisors Midstream Access Day, held January 27 in Houston. The projects include:
- Lonesome Creek Grassroot Natural Gas Processing Plant and related infrastructure, a $550 million to $680 million project expected to come online by yearend 2015
- Killdeer Bear Creek Natural Gas Processing Plant, a $230 million to $330 million facility scheduled to begin operating by midyear 2016
- Watford City Demicks Lake Natural Gas Processing Plant, a $515 million to $670 million project with an in-service date of late 2016
- Stateline De-ethanization facilities, a $70 million project expected to begin operating by year-end 2015
That would be a robust slate of projects under development for most companies, but ONEOK Partners also is developing $265 million to $355 million of infrastructure projects in Wyoming's Powder River Basin. The largest of these projects is the Bronco Natural Gas Processing Plant in Converse County, Wyoming, a $170 million to $245 million project, which is scheduled to begin operating in the third quarter of 2016. ONEOK Partners also is investing about $1 billion over the next two years to expand its NGL takeaway capacity in the Williston and Power River basins.
In Oklahoma, ONEOK Partners has between $365 million and $470 million of midstream projects under development. The largest of these is the Marlow Knox Natural Gas Processing Plant, which will add about 200 million cubic feet of gas-processing capacity when it comes online by the end of next year.
In the Permian Basin, ONEOK Partners is in the process of integrating the 2,600 miles of recently purchased NGL gathering pipelines into its existing NGL asset base. ONEOK Partners bought those assets late last year from Chevron (NYSE:CVX) (San Ramon, California) for $800 million. ONEOK Partners is planning on an additional $500 million of growth investments in the Permian over the next five years.
"Acquiring these natural gas liquids pipelines allows us to continue to serve producers in the Permian Basin and other multiple high-producing, NGL-rich basins, including the Williston Basin, the Powder River Basin, and the Cana-Woodford and SCOOP [Southern Central Oklahoma Oil Province] plays in Oklahoma," said ONEOK Partners President and Chief Executive Terry K. Spencer in a statement when his company acquired the Chevron NGL assets. ONEOK Partners' "presence in the Permian Basin now is significantly stronger, and this acquisition establishes a new geographic region for natural gas liquids volume growth," he added.
ONEOK Partners also wants to build a 208-mile intrastate gas pipeline in Texas to serve growing demand for gas in El Paso, Texas, and Mexico. If constructed, the project--as yet unnamed--will transport between 500 million and 600 million cubic feet of gas per day (MMcf/d) from the Waha hub area to a delivery point near San Elizario, Texas. The project has a total investment value of between $450 million and $550 million.
By yearend 2015, ONEOK Partners plans to double the volume of gas it gathers, compared to 2010 levels. Also by yearend 2015, ONEOK Partners plans to more than double the volume of gas it processes, compared with 2010. The company also expects continued growth in the volume of NGLs it gathers and processes.
In addition to the $2.4 billion to $3 billion of capital projects planned for 2015 and 2016, ONEOK officials told investors last month it had an additional $4 billion to $5 billion of unannounced growth projects under development for the post-2016 period.
"ONEOK Partners and ONEOK Incorporated are doing a very nice business gathering, processing and transporting the rising volumes of natural gas and NGLs that are being produced because of the shale revolution," said Jesus Davis, Industrial Info's vice president of research for the Oil & Gas Production, Pipelines and Terminals industries. "The volumes of gas and NGLs they gather, process or transport could be impacted by low commodity prices, but that risk seems manageable. As the U.S. increases its use of gas and NGLs, and grows its export volumes of those commodities, we see a lot of benefits accruing to ONEOK Partners."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
