Midstream Operator ONEOK Sees Solid Results as Producer Activity Increases

Researched by Industrial Info Resources (Sugar Land, Texas)--Midstream operator ONEOK Incorporated (NYSE:OKE) (Tulsa, Oklahoma) saw solid results in the just passed third-quarter 2021, with net income increasing by 26% from the prior-year quarter, allowing the company to lift its 2021 net income guidance. The income boost comes thanks largely to increased natural gas and natural gas liquids (NGLs) production activity, which increased ONEOK's throughput both on pipelines and at processing facilities. And with the recent completion of a processing plant in North Dakota, the company's throughput is expected to increase even more.

In the company's third-quarter earnings conference call with analysts, Chief Executive Officer Pierce Norton II said, "As world economics continue to recover from the pandemic, we're seeing demand continue to recover for natural gas and NGLs, and we're focused on helping to meet that increasing demand for these critical energy products, particularly as we head into the winter months."

The company's total NGL raw throughput volumes in the third quarter increased 5% compared with second-quarter 2021 and 10% year over year, averaging nearly 1.3 million barrels per day (BBL/d), the company's highest NGL volume to date.

ONEOK's natural gas processing capacity continues to grow, and its Bear Creek II processing plant in Dunn County, North Dakota, in the Williston Basin was recently completed. The new train will process up to 200 million cubic feet per day. Chief Operating Officer Kevin Burdick said, "With our Bear Creek plant expansion and related compressor stations now complete and in service, we should see a significant number of well completions in the fourth quarter in Dunn County, as producers have timed their completions with the startup of our expansion to avoid flaring. The new plant will accommodate increasing volumes as it ramps up to full capacity over the next two to three years." Burdick said with the plant's completion, ONEOK now has approximately 1.7 billion cubic feet per day of processing capacity in the Williston Basin. Subscribers to Industrial Info's Global Market Intelligence (GMI) Production Project Database can click here for the detailed project report.

Other ONEOK projects nearing completion and soon to begin the ramp-up process include the addition of fifth NGL fractionator (MB-5) at the company's facility in Mont Belvieu, Texas. The 125,000-BBL/d fractionator will utilize wet natural gas from the Granite Wash, Cana-Woodford Shale and Eagle Ford Shale formations, bringing total site fractionation capacity to 400,000 BBL/d. Subscribers can click here for the project report.

Burdick said in the company's Rocky Mountain region, which showed a 47% increase in NGL raw feed throughput volume in the quarter compared with third-quarter 2020, there are currently 32 rigs and 10 completion crews operating, with 17 rigs and five completion crews on ONEOK's dedicated acreage.

The rise in U.S. petrochemical production, which uses natural gas and NGLs (particularly ethane) as a feedstock, also is providing a boon to ONEOK. "Petrochemical demand continues to strengthen as facilities have returned to normal operations following Hurricane Ida and as the pandemic recovery continues," said Burdick. "Two new petrochemical plants coming online before the end of the year could provide more than 160,000 BBL/d of additional ethane demand once fully operational."

ONEOK expects to connect more than 300 wells to its system this year. The company's capital expenditures for 2021 are expected to be at the higher end of its guidance range of $525 million to $675 million.

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