ONEOK Inc. will invest $2.3 billion by 2020 in three projects in Oklahoma, Texas and North Dakota to provide additional natural gas and natural gas liquids (NGL) infrastructure.
“With more than $4 billion of announced capital-growth projects since June 2017, we continue to build off of our significant asset footprint,” said Terry Spencer, ONEOK president and CEO.
The new 530-mile, 400,000-barrels-per-day (bpd) Arbuckle II Pipeline will connect ONEOK’s Mid-Continent infrastructure in Oklahoma with its facilities in Mont Belvieu, Texas, to create additional NGL transportation capacity. ONEOK plans to build a new 125,000 bpd NGL fractionator—called the MB4—and related infrastructure in Mont Belvieu.
To serve the Williston Basin, the company will build a new 200-million cubic-feet-per-day natural gas processing facility called the Demicks Lake plant and related infrastructure. Spencer said the plant will provide critical gas processing capacity to accommodate increased production while helping producers meet gas capture targets in North Dakota.
The Arbuckle II Pipeline is expected to be completed in the first quarter 2020. The pipeline will have the capability to be expanded up to 1 million bpd with additional pump facilities, which could more than double ONEOK’s current capacity between the Mid-Continent and Gulf Coast.
The MB-4 fractionator includes additional NGL storage capacity in Mont Belvieu should be completed in the first quarter of 2020 at a cost of about $575 million. ONEOK’s total NGL fractionation capacity will then increase to 965,000 bpd.
The Demicks Lake natural gas processing plant and related field infrastructure are expected to cost a total of approximately $400 million and be completed during the fourth quarter 2019. The plant will be built in McKenzie County, North Dakota—the core area of the Williston Basin. The plant is supported by acreage dedications with primarily fee-based contracts.
The Demicks Lake plant is expected to contribute additional NGL volumes to ONEOK’s NGL gathering system and natural gas volumes to the company’s 50 percent-owned Northern Border Pipeline. ONEOK’s Williston Basin natural gas processing capacity will increase to more than 1.2 billion cubic feet per day once the plant is completed.
“The Arbuckle II Pipeline and MB-4 fractionator will help meet the needs of NGL producers in all of the basins where we operate, including the STACK and SCOOP areas and the Denver-Julesburg, Powder River, Williston and Permian basins,” Spencer said. “These strategic projects complement our recently announced Elk Creek pipeline, increasing ONEOK’s ability to deliver NGLs from the Rocky Mountain region to growing markets in the Gulf Coast.”
According to ONEOK, the projects are expected to generate adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) multiples of four to six times. Following the company’s recently completed equity issuances totaling approximately $1.6 billion, project funding is expected to come from cash generated from operations and short- and long-term borrowings. ONEOK does not expect to issue additional equity in 2018 and well into 2019.