ONEOK Builds Out Pipeline Systems Across Texas, Oklahoma as NGL Outlook Improves

Researched by Industrial Info Resources (Sugar Land, Texas)--Rising prices for natural gas liquids (NGL) are among the factors spurring productivity at ONEOK Incorporated (NYSE:OKE) (Tulsa, Oklahoma), which saw its fee-based services expand in second-quarter 2018 with incremental volume growth across its system. Industrial Info is tracking nearly $3 billion in active projects involving ONEOK, more than half of which are in Texas.

Click on the image at right to see a graph detailing the top five U.S. states for ONEOK projects, by investment value.

One of ONEOK's largest ventures in Texas is the $575 million addition of an NGL fractionator at its complex in Mont Belvieu, Texas. The company plans to bring the site's total capacity to 275,000 barrels per day (BBL/d) of ethane, propane, isobutane, normal butane and natural gasoline, using NGLs from the Granite Wash, Cana-Woodford Shale and the Eagle Ford Shale. Construction is expected to begin in the fourth quarter. For more information, see Industrial Info's project report.

"Site work has begun on our 125,000 barrel per day MB-4 fractionator and we remain on schedule for this facility to be complete in the first quarter of 2020," said Kevin Burdick, the chief operating officer of ONEOK, in an earnings-related quarterly conference call.

One of the most important ONEOK projects under construction in the region is the $155 million cryogenic gas-processing plant expansion in Calumet, Oklahoma, which would double the facility's capacity to 400 million standard cubic feet per day. The project, which is set to be complete by the end of the year, is in response to rapidly increasing customer production in the STACK play. Primarily, it is supported by fee-based contracts and minimum volume commitments. For more information, see Industrial Info's project report.

"We have approximately 60 million cubic feet per day of available processing capacity [in Oklahoma], and we'll add an additional 200 million cubic feet per day of capacity in Oklahoma in the fourth quarter of this year, with the expected completion of our Canadian Valley plant expansion, which remains on schedule," Burdick said.

A large project spanning both states is the Arbuckle II Pipeline, which is designed to transport unfractionated NGLs from ONEOK's supply basins and gathering system in Oklahoma to the company's storage and fractionation facilities at Mont Belvieu. The company expects the roughly 530-mile line to have an initial capacity of up to 400,000 BBL/d and to be completed in the first quarter of 2020.

Click on the image at right for a map of the proposed Arbuckle II NGL pipeline.

Industrial Info is tracking the 130-mile, $150 million Oklahoma and 400-mile, $800 million Texas portions of the line, as well as pump stations, each valued at $50 million, in Velma, Oklahoma; Weatherford, Texas; and Kurten, Texas. In the conference call, ONEOK executives said capacity utilization on existing portions of the Arbuckle line are in the 85% to 90% range, and the company currently is moving all of the Y grade it can out of the mid-continent areas on Arbuckle. For more information, see Industrial Info's project reports on the Oklahoma line, Texas line, and Velma, Weatherford and Kurten pump stations.

"We continue to expect transportation capacity from Conway to Mont Belvieu will remain highly utilized due to growing NGL volumes, which we expect will sustain current spreads until Arbuckle II is placed in service," Burdick said. He later added: "We are currently buying right-of-way for Arbuckle II and remain on schedule for that project, which is expected to be complete in the first quarter of 2020. We've contracted an additional 30,000 barrels per day on Arbuckle II, bringing our total contracted volume to approximately 290,000 barrels per day."

Also in Texas, ONEOK is at work on the $125 million Orla-to-Midland pipeline, which extends an existing line 120 miles to transport 110,000 BBL/d of NGL. The company also is working on a $30 million pump-station expansion in Orla. For more information, see Industrial Info's project reports on the pipeline and pump-station expansions.

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