ONEOK Partners, L.P. announced plans to invest approximately $650 million to $780 million between now and the second quarter 2016 to:
- Build a new 200-million cubic feet per day (MMcf/d) natural gas processing facility – the Lonesome Creek plant – and related infrastructure in McKenzie County, N.D., in the Bakken Shale in the Williston Basin; the Lonesome Creek plant is the partnership's sixth new natural gas processing plant built in the region since 2010 and seventh plant overall; and
- Complete a second expansion of the Bakken NGL Pipeline, which will increase the pipeline's capacity to 160,000 barrels per day (bpd) from 135,000 bpd.
"Production in the Williston Basin continues to increase with no signs of leveling off or slowing," said Terry K. Spencer, president, ONEOK Partners. "The new Lonesome Creek plant and related infrastructure will be well-positioned to capitalize on existing ONEOK Partners assets and provide producers in the area with essential natural gas processing capacity. These investments are another example of ONEOK Partners' ongoing commitment to address natural gas gathering and processing constraints in the region and help reduce natural gas flaring in North Dakota.
"This additional expansion of our Bakken NGL Pipeline will allow us to transport additional natural gas liquids (NGL) volumes from the Lonesome Creek plant to our Mid-Continent NGL infrastructure," added Spencer. The new Lonesome Creek plant is expected to cost approximately $320 million to $390 million. When complete, the new plant will be the partnership's largest natural gas processing plant in North Dakota and will increase the partnership's total natural gas processing capacity in the state to approximately 800 MMcf/d.
In addition to the Lonesome Creek plant, ONEOK Partners also expects to invest approximately $230 million to $290 million for related expansions and upgrades to its existing natural gas gathering and compression infrastructure. The Lonesome Creek plant and related infrastructure are expected to be completed by the end of 2015 and will be supported by acreage dedications from producers.
To accommodate NGL volumes produced from the new Lonesome Creek plant, ONEOK Partners expects to invest an additional $100 million to increase capacity on its Bakken NGL Pipeline, an approximately 600-mile pipeline completed in April 2013 that transports unfractionated NGLs produced in the Williston Basin to the partnership's 50 percent-owned Overland Pass Pipeline.
This second expansion of the Bakken NGL Pipeline, which is expected to be complete during the first half of 2016, will increase its capacity to 160,000 bpd to accommodate NGL volumes from the new Lonesome Creek plant. The Bakken NGL Pipeline is currently being expanded to 135,000 bpd from an original capacity of 60,000 bpd. This previously announced initial expansion is expected to be complete in the third quarter 2014.
ONEOK Partners is the largest independent operator of natural gas gathering and processing facilities in the Williston Basin, with a natural gas gathering system of more than 6,000 miles and more than 3 million acres where production is dedicated to its systems.
Capital Projects:
The partnership has announced total investments of approximately $6.0 billion to $6.4 billion through 2016 for acquisitions and infrastructure growth projects related to natural gas gathering and processing, and natural gas liquids, which includes the projects described above. These investments consist of approximately $3.0 billion to $3.2 billion for natural gas gathering and processing projects, and approximately $3.0 billion to $3.2 billion for natural gas liquids projects. Approximately $3.1 billion to $3.4 billion are for growth projects related to resource development in the Williston Basin.
In aggregate, these projects are expected to generate EBITDA multiples of five to seven times. The incremental earnings from these projects are expected to increase distributable cash flow and value to unitholders in the form of higher distributions. After this announcement the partnership continues to have a $2 billion to $3 billion backlog of unannounced growth projects that it continues to evaluate. Additional projects included in this backlog will be announced when sufficient supply commitments are completed.
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