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Released February 25, 2021 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Pipeline owner and operator ONEOK Incorporated (NYSE:OKE) (Tulsa, Oklahoma) faced an uphill battle in 2020, and it shows in the company's bottom line for the year. ONEOK reported 2020 net income of $612.8 million, compared with $1.28 billion in 2019. Things seemed to pick up in the fourth quarter, however, when net income ran only $12.3 million less than the prior year. To this end, ONEOK has slashed planned capital spending in 2021 to between $525 million and $675 million, a more than 70% decrease compared with 2020. Industrial Info is tracking more than $1.2 billion in active ONEOK projects.
Click on the image at right for a breakdown by state of active ONEOK projects.
In this week's earnings conference call with industry analysts, ONEOK executives discussed the company's focus for 2021, particularly the Bakken Shale, where the company faces some possible changes.
Much of the natural gas liquids (NGLs) that ONEOK ships from North Dakota are associated product from oil production in the Bakken Shale. However, the area's main pipeline for oil transmission, the 570,000-BBL/d Dakota Access Pipeline (DAPL), has faced challenges before it began operating and continues to do so, which could affect the area's oil production and associated NGLs. In April 2020, a U.S. district judge said that a more extensive environmental review was necessary than the environmental assessment conducted by the U.S. Army Corps of Engineers. The court ordered a halt to pipeline operations in August, pending a new environmental review. ONEOK even floated the idea of converting its NGL system to carry crude oil instead should the DAPL close. However, an appeals court later ruled the pipeline did not have to shut down.
In January of this year, a federal appeals court upheld the mandate for another full environmental impact review, but declined to shut the line while the review is completed. However, environmental groups and the Standing Rock Sioux Tribe maintain that the pipeline is operating illegally now, as its previous permits are void. In February, another court case regarding the pipeline was bumped to April 9 to give government lawyers more time to brief the new Biden administration on the case.
It is possible the Biden administration could order the pipeline to stop operating while a new review takes place, which could possibly affect the amount of production in the area, as producers' main exit artery would be closed. However, ONEOK executives expressed optimism about the future and the continued production of oil and associated NGLs from the Bakken.
In the conference call, Chief Executive Officer Terry Spencer said, "We believe that the potential impact to ONEOK, if DAPL were shut down, has significantly decreased. Producers have had time to secure alternative crew transportation, and we've seen crude oil prices increase, making rail transportation even more feasible. We believe that even if DAPL is shut down quickly after a ruling in April, the earnings impact to ONEOK in 2021 would be less than $50 million of EBITDA [earnings before interest, taxes, depreciation and amortization], assuming the pipeline was shut down for the remainder of the year."
ONEOK appears to be focused on North Dakota for its growth capital outlays in the coming year. Chief Financial Officer Walt Hulse said that the company's 2021 plans included "capital to complete the Bear Creek plant expansion and associated field infrastructure later this year." The second train at the Bear Creek cryogenic natural gas processing plant in Dunn County, North Dakota, will process up to 200 million cubic feet per day of natural gas. In early 2020, construction was deferred until drilling activity, which was slowed due to COVID-19, picked up again in the Williston Basin. Hulse said, "Conversations with producers in the Dunn County area of the Williston Basin remain extremely positive, and the likelihood of needing this additional capital this year is high." For more information, see Industrial Info's project report.
No mention was made during the earnings conference call regarding the status of a NGL fractionator project in Mont Belvieu, Texas, where construction was halted in April, 2020, due to market impacts brought about by COVID-19. The 125,000-barrel-per-day (BBL/d) unit would have brought total site capacity to 400,000 BBL/d. For more information, see Industrial Info's project report.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
Click on the image at right for a breakdown by state of active ONEOK projects.In this week's earnings conference call with industry analysts, ONEOK executives discussed the company's focus for 2021, particularly the Bakken Shale, where the company faces some possible changes.
Much of the natural gas liquids (NGLs) that ONEOK ships from North Dakota are associated product from oil production in the Bakken Shale. However, the area's main pipeline for oil transmission, the 570,000-BBL/d Dakota Access Pipeline (DAPL), has faced challenges before it began operating and continues to do so, which could affect the area's oil production and associated NGLs. In April 2020, a U.S. district judge said that a more extensive environmental review was necessary than the environmental assessment conducted by the U.S. Army Corps of Engineers. The court ordered a halt to pipeline operations in August, pending a new environmental review. ONEOK even floated the idea of converting its NGL system to carry crude oil instead should the DAPL close. However, an appeals court later ruled the pipeline did not have to shut down.
In January of this year, a federal appeals court upheld the mandate for another full environmental impact review, but declined to shut the line while the review is completed. However, environmental groups and the Standing Rock Sioux Tribe maintain that the pipeline is operating illegally now, as its previous permits are void. In February, another court case regarding the pipeline was bumped to April 9 to give government lawyers more time to brief the new Biden administration on the case.
It is possible the Biden administration could order the pipeline to stop operating while a new review takes place, which could possibly affect the amount of production in the area, as producers' main exit artery would be closed. However, ONEOK executives expressed optimism about the future and the continued production of oil and associated NGLs from the Bakken.
In the conference call, Chief Executive Officer Terry Spencer said, "We believe that the potential impact to ONEOK, if DAPL were shut down, has significantly decreased. Producers have had time to secure alternative crew transportation, and we've seen crude oil prices increase, making rail transportation even more feasible. We believe that even if DAPL is shut down quickly after a ruling in April, the earnings impact to ONEOK in 2021 would be less than $50 million of EBITDA [earnings before interest, taxes, depreciation and amortization], assuming the pipeline was shut down for the remainder of the year."
ONEOK appears to be focused on North Dakota for its growth capital outlays in the coming year. Chief Financial Officer Walt Hulse said that the company's 2021 plans included "capital to complete the Bear Creek plant expansion and associated field infrastructure later this year." The second train at the Bear Creek cryogenic natural gas processing plant in Dunn County, North Dakota, will process up to 200 million cubic feet per day of natural gas. In early 2020, construction was deferred until drilling activity, which was slowed due to COVID-19, picked up again in the Williston Basin. Hulse said, "Conversations with producers in the Dunn County area of the Williston Basin remain extremely positive, and the likelihood of needing this additional capital this year is high." For more information, see Industrial Info's project report.
No mention was made during the earnings conference call regarding the status of a NGL fractionator project in Mont Belvieu, Texas, where construction was halted in April, 2020, due to market impacts brought about by COVID-19. The 125,000-barrel-per-day (BBL/d) unit would have brought total site capacity to 400,000 BBL/d. For more information, see Industrial Info's project report.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
