Higher NGL Volumes Lead to Higher Profits for ONEOK

Researched by Industrial Info Resources (Sugar Land, Texas)--Despite severe April weather in its Rocky Mountains service area that hindered operations and the unplanned shutdown due to fire of a fractionation facility in Oklahoma, ONEOK Incorporated (NYSE:OKE) (Tulsa, Oklahoma) reported good results for the second quarter of 2022 due to increased natural gas liquids (NGL) throughput volumes on its system and higher commodities prices. ONEOK reported second-quarter net income of $441 million, a 21% increase from the corresponding quarter of 2021.

With several well completions expected across its acreage, ONEOK expects operating income to remain strong throughout the year. In the recently passed quarter, ONEOK was given a boost by $60.8 million in higher average fee rates and $16.1 million in higher volumes, primarily in the Rocky Mountain region and the Permian Basin.

The company's total NGL throughput volumes increased 5% in the quarter compared with second-quarter 2021.

Rocky Mountains Region
In a Tuesday conference call with analysts, Chief Operating Officer Kevin Burdick reported that ONEOK had connected 157 wells in the Rocky Mountains region in the first six months of this year and expects to end the year with approximately 375 to 425 well connections there this year. NGL throughput in the region increased 10% from last year.

ONEOK is making contingency plans to support further NGL volume increases in the Rockies region. The company's current total capacity is approximately 440,000 barrels per day (BBL/d), and the company says that "minimal capital" is needed to further expand its Elk Creek NGL Pipeline by 100,000 BBL/d with pump stations to meet future customer needs.

The company's processed natural gas volumes in the region decreased from last year due to severe April weather.

Permian Basin
ONEOK's second-quarter NGL throughput volumes in the Permian region increased 10% year over year. The company completed a 25,000-barrel-per-day expansion on a portion of its West Texas NGL pipeline to support expected continued growth.

Mid-Continent
ONEOK's NGL throughput volumes in the Mid-Continent region rose 4% compared with last year, while natural gas processing volumes were up 8% from first-quarter 2022. Twenty-five wells have been connected in the region year to date, with ONEOK expecting to connect 30 to 50 wells in the region this year. ONEOK estimates that there are 250 drilled but uncompleted wells (DUCs) on its dedicated acreage in the region, meaning limited activity is needed to maintain volumes.

ONEOK reported that gas flaring in the Williston Basin decreased from 36% in 2014 to 6% in May 2022. Estimated flaring on ONEOK's dedicated acreage is more than 30% less than North Dakota's statewide flaring average, and this is likely to decrease as ONEOK expands its processing capacity.

ONEOK continues with the construction of a third natural gas processing train at its Demicks Lake plant in McKenzie County, North Dakota. The facility will process up to 200 million cubic feet per day of natural gas, bringing the plant's total processing capacity to 600 million cubic feet per day. Construction was paused at the onset of the COVID-19 pandemic, but has subsequently resumed and is now on track to be completed in the first quarter of 2023. Subscribers to Industrial Info's Global Market Intelligence (GMI) Production Project Database can click here for more details.

Mont Belvieu Fractionator
In Mont Belvieu, Texas, ONEOK is underway with construction on an NGL fractionator, known as MB-5. The 125,000-BBL/d plant will bring the site's total fractionation capacity to 400,000 BBL/d. Construction is expected to be completed early in the second quarter of 2023. Subscribers can click here for the detailed report.

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