ONEOK: Invests $735M for U.S NGL construction project

ONEOK Partners, L.P plans to invest around $595 million to $735 million for the construction of natural gas liquids (NGL) projects by 2013.

The preliminary cost estimates for the new projects are: $450 million to $550 million to build a 525- to 615-mile NGL pipeline that will transport unfractionated NGLs from the Bakken Shale in the Williston Basin in North Dakota to the partnership's Overland Pass Pipeline, a 760-mile NGL pipeline extending from southern Wyoming to Conway, Kan.; $35 million to $40 million for related capacity expansions for ONEOK Partners' anticipated 50-percent interest in the Overland Pass Pipeline to transport the additional unfractionated NGL volumes from the new Bakken Pipeline; and $110 million to $140 million to expand the partnership's fractionation capacity at Bushton, Kan., by 60,000 barrels per day to accommodate the additional NGL volumes.

The projects are expected to generate EBITDA (earnings before interest, taxes, depreciation and amortization) multiples of five to seven times, when combined. An increased distributable cash flow and increased value to unit holders is due to result from the incremental fee-based earnings from the projects.

"As producers continue to aggressively develop NGL-rich natural gas production from crude oil-producing wells in the Bakken Shale and Three Forks formations, natural gas liquids takeaway capacity is required," stated Terry K. Spencer, ONEOK Partners chief operating officer.

The proposed Bakken Pipeline will initially transport up to 60,000 barrels per day of unfractionated NGL production from the ONEOK Partners extensive natural gas gathering and processing assets in the Bakken Shale and from third-party natural gas processing plants south through western North Dakota and eastern Montana to Wyoming, where it will connect to the Overland Pass Pupeline near Cheyenne, Wyoming. The volumes are then to be supplied to ONEOK Partners existing NGL infrastructure in the Mid-Continent. Pump facilities also have the capability of increasing the new pipeline capacity to 110,000 barrels per day.

Negotiations are currently underway for supply commitments for the Bakken Pipeline with third-party processors, which will be combined with NGL production from ONEOK Partners’ natural gas processing plants.

Construction of the 12-inch in diameter pipeline is due to commence in the second quarter of 2012 upon the receipt of all required permits. Pipeline construction is due to be complete within the first half of 2013.