ONEOK Reports Surge in Third-Quarter Profits, with Billions of Dollars in Project Development

Researched by Industrial Info Resources (Sugar Land, Texas)--Reporting an 89% increase in third-quarter profits year over year, executives with natural gas midstream company ONEOK Incorporated (NYSE:OKE) (Tulsa, Oklahoma ) outlined a laundry list of pipeline, fractionation and processing projects in various stages of development.

Click on the image at right for a graph showing ONEOK project activity by state.

ONEOK has announced more than $6 billion of organic capital-growth projects since June to support increasing production, the company said in its earnings release. For the just-ended quarter, the company reported $444.8 million in capital expenditures (capex). For all of 2018, it expects growth capex to range from $1.95 billion to $2.3 billion.

Third-quarter net income was $313.3 million, compared with $165.7 million in the same quarter a year earlier. The company cited higher volumes in the Williston Basin in the Dakotas and Montana, and Oklahoma's STACK and SCOOP areas.

ONEOK said it saw an 18% increase in natural gas liquids (NGL) volumes and a 15% increase in natural gas volumes processed in the third quarter, compared with a year earlier.

"Fractionated NGL volumes averaged 732,000 barrels per day per day during the third quarter, a 21% increase compared with the same period last year," Chief Financial Officer Kevin Burdick told investment analysts during the company's earnings conference call. "Fractionation capacity across the industry remains tight. And our fractionators have been running near capacity. With recent expansion and debottlenecking projects, we estimate we have more than 800,000 barrels per day of fractionation capacity given our current product composition."

Construction of the 1.3 billion Arbuckle II pipeline in Oklahoma is underway and scheduled for completion in first-quarter 2020, Burdick said. The 400,000 barrel-per-day (BBL/d) pipeline will transport unfractionated NGL from ONEOK's gathering system in Oklahoma to fractionation facilities in Mont Belvieu, Texas. The company has announced a 100,000 BBL/d expansion of the pipeline, with completion in 2021. For more information on Arbuckle II, see Industrial Info's project report.

At Mont Belvieu, ONEOK's $575 million MB4 fractionator unit addition is on schedule for completion in the first quarter of 2020, Burdick said. The 125,000 BBL/d NGL fractionator will increase ONEOK's total fractionation capacity at Mont Belvieu to 275,000 BBL/d of ethane, propane, isobutane, normal butane and natural gasoline. Burns & McDonnell Incorporated (Kansas City, Missouri) is providing engineering, procurement and construction (EPC) on the project. The company also is planning a $750 million MB5 fractionator project, bringing its Mont Belvieu fractionation capacity to 400,000 BBL/d by 2021. See Industrial Info's project reports on MB4 and MB5.

During the third quarter, ONEOK completed the expansion of its Canadian Valley natural gas processing plant in the STACK area, bringing its total Oklahoma processing capacity to about 1.1 billion cubic feet per day, Burdick said. For more information, see Industrial Info's project report.

Construction remains on track for ONEOK's $1.4 billion Elk Creek NGL pipeline, which will run 900 miles from eastern Montana to NGL facilities in Bushton, Kansas, Burdick said, with expectations that the southern section of the pipeline will be completed as early as third-quarter 2019, and the entire pipeline by the end of that same year. For more information, see Industrial Info's project report on the Montana, Wyoming, Colorado and Kansas sections of the pipeline.

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