ONEOK Expects Further Growth After Strong 2021

Researched by Industrial Info Resources (Sugar Land, Texas)--Midstream natural gas company ONEOK Incorporated (NYSE:OKE) (Tulsa, Oklahoma) demonstrated that 2021 was a year of financial recovery, and the company is poised to take its financial gains even further in the coming years with the recent restart of two key projects. The company reported fourth-quarter 2021 net income of $379 million, compared with $308 million in the corresponding period of 2020. Full-year 2021 net income was $1.5 billion, compared with $613 million in 2020.

In a Tuesday conference call with analysts, ONEOK executives were bullish on the company's prospects, particularly in one of the company's key gathering and processing areas, the Williston Basin of North Dakota. Chief Executive Officer Pierce Norton said, "Our customers are well-capitalized, with decades of proven reserves, and many have announced plans to sustain and grow production levels in 2022. In the Williston Basin in particular, steady crude oil production still means NGL [natural gas liquids] and natural gas growth for ONEOK due to rising gas-to-oil ratios."

Aiding ONEOK's processing growth in the Williston is the addition of a second natural gas processing train at its Bear Creek plant in Dunn County, in the heart of the basin. Construction on the train was completed in November. Chief Operating Officer Kevin Burdick said, "With the recent completion of our Bear Creek plant expansion, we are already seeing increasing volumes from Dunn County, and we expect the plant will continue to ramp up over the next two to three years. However, with activity levels in the area consistently outpacing our expectations, we could be looking at an even quicker ramp." Train 2 at Bear Creek has a nameplate processing capacity of 200 million cubic feet per day. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production Project Database can click here for the detailed project report.

Production growth anywhere in the Midcontinent region is good for ONEOK. "Our NGL system is connected to more than 90% of the natural gas processing plants in the Midcontinent, so any increased producer activity in the region is likely to provide NGL volume to ONEOK, regardless if the activity is on our gathering and processing dedicated acreage," said Burdick.

The Permian Basin of Texas and New Mexico also brings strong prospects to the company. Burdick said, "In the Permian Basin, we expect double-digit NGL volume growth on our West Texas NGL pipelines compared with 2021, driven by increased volumes in the Midland and Delaware basins. The volume growth is primarily from long-term contracts entered into a few years ago as well as new contracts we have recently signed."

In November 2021, ONEOK announced it would restart two projects that had been placed on hold for economic reasons brought about by the COVID-19 pandemic: the Demicks Lake III natural gas processing plant in North Dakota and the MB-5 NGL fractionator in Mont Belvieu, Texas.

The Demicks Lake III plant will add 200 million cubic feet per day of processing capacity, bringing total plant capacity to 600 million cubic feet per day. Optimized Process Designs (Katy, Texas) is providing engineering, procurement and construction (EPC) services on the project, which is expected to be completed in 2023. Subscribers can click here for the project report.

The MB-5 fractionator in Texas will add 150,000 barrels per day (BBL/d) of NGL fractionation capacity, bringing total site capacity to 400,000 BBL/d. The project is expected to be completed in the summer of 2023. Subscribers can click here for the detailed report.

ONEOK expects 2022 capital expenditures of approximately $975 million, which includes both growth and maintenance capital.

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