Growing U.S. Natural Gas, NGL Production a Boon to ONEOK

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Researched by Industrial Info Resources (Sugar Land, Texas)--The growing production of natural gas and natural gas liquids (NGLs) in the U.S. has been a boon to midstream companies such as ONEOK Incorporated (NYSE:OKE) (Tulsa, Oklahoma), which has infrastructure ranging from North Dakota to Texas. The company has recently completed major growth projects and is approaching completion of others. ONEOK expects growth capital spending in 2020 to be between $2.25 billion and $2.73 billion.

Click on the image at right for a breakdown by state of active ONEOK projects.

Among the major projects ONEOK wrapped up in the just-passed fourth quarter was the 900-mile Elk Creek NGL pipeline, running from the Williston Basin in North Dakota to the company's facilities in Bushton, Kansas. The pipeline has a transportation capacity of 240,000 barrels per day (BBL/d), expandable to 400,000 BBL/d. The pipeline is expected to ramp up 240,000 BBL/d by the end of this quarter. Construction kicked off early last year. Click here for a list of associated projects. This week, ONEOK announced that it will proceed with expanding the capacity of the pipeline, which should be completed in 2021.

In North Dakota, ONEOK completed its Demicks Lake I natural gas processing plant, which can process 200 million cubic feet per day. A second plant, Demicks Lake II, will double processing capacity. In the company's recent conference call with industry analysts, Chief Operating Officer Kevin Burdick said the first plant is expected to be fully operating by the end of first-quarter 2020 and that Demicks Lake II would ramp up to full capacity over the next 12 to 18 months. Burdick said that plants would provide ONEOK with an opportunity to capture gas currently being flared in the region's oil production. For additional information, see Industrial Info's project reports on Demicks Lake I and Demicks Lake II.

Also in North Dakota, construction on the Bear Creek II natural gas processing plant in Dunn County began last year. Burdick said, "Our Bear Creek plant remains on schedule to be completed early in the first quarter of 2021, which will provide much-needed processing capacity to the highly productive, geographically isolated Dunn County area, where we have substantial acreage dedication." Burdick said with the completion of the Demicks Lake II and Bear Creek II facilities, ONEOK would have approximately 1.9 billion cubic feet per day of processing capacity in the Williston Basin.

Further south, ONEOK is expanding NGL fractionation capacity in Mont Belvieu, Texas, where the company is ramping up a fourth and constructing a fifth fractionator, MB-4 and MB-5. Burdick said, "Phase I of our MB-4 fractionator, which was completed in December, has increased our capacity by 75,000 BBL/d. Phase II of the project, which will add the remaining 50,000 BBL/d of capacity, remains on schedule for completion by the end of the first quarter of 2020." Burdick said the MB-5 fractionator, which will add 125,000 BBL/d of capacity, was on track for completion in the first quarter of next year. For more information, see Industrial Info's project reports on MB-4 and MB-5.

Among the other projects ONEOK expects to complete this quarter is the Arbuckle II NGL pipeline, which will transport unfractionated NGLs from Oklahoma to Mont Belvieu. Construction kicked off early last year, with various general contractors. The 530-mile pipeline will move 400,000 BBL/d. For more information, see Industrial Info's project reports on the Oklahoma and Texas portions of the pipeline.

ONEOK reported fourth-quarter 2019 net income of $320.3 million, compared with $292.9 million in the prior-year quarter. Full-year net income was $1.28 billion, compared with $1.16 billion in 2018.

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