Oneok Partners to build Bakken NGL pipeline

Christopher E. Smith
OGJ Pipeline Editor

HOUSTON, July 27 -- Oneok Partners LP announced plans to build a 525-615-mile, 60,000 b/d NGL pipeline to move 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. Additional pump facilities could increase the new pipeline's capacity to 110,000 b/d.

Oneok estimates the cost of the Bakken Pipeline at $450-550 million. An additional $35-40 million will be dedicated to related capacity expansions for the Overland Pass Pipeline to transport the new unfractionated NGL volumes from the Bakken Pipeline, with $110-140 million to expand the partnership's fractionation capacity at Bushton, Kan., by 60,000 b/d to 210,000 b/d, accommodating the additional NGL volumes.

Supply commitments for the Bakken Pipeline will be anchored by NGL production from Oneok’s gas processing plants and from third-party processors in various stages of negotiation. Following receipt of necessary permits, construction of the 12-in. OD pipeline will begin in second-quarter 2012 for completion during first-half 2013.

Additional raw NGL volumes from the new Bakken Pipeline and other supply sources under development in the Rockies will require the estimated $35-40 million to cover additional pump stations and expansion of existing pump stations for Oneok’s anticipated 50% interest in the Overland Pass Pipeline, increasing its capacity to the maximum of 255,000 b/d.

Oneok expects these projects in aggregate to generate earnings before interest, taxes, depreciation, and amortization (EBITDA) multiples of five to seven times.

The Bakken Pipeline project and related expansions follow Oneok’s April announcement of more than $400 million of new growth projects in the Bakken shale, including construction of a 100 MMcfd gas processing facility in eastern McKenzie County, ND—the Garden Creek Plant—that will double the partnership's processing capacity in the region (OGJ Online, Apr. 22, 2010).

Contact Christopher E. Smith at chriss@ogjonline.com.

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