Oneok Partners LP, Tulsa, has agreed to acquire NGL pipelines and related assets in the Permian basin from affiliates of Chevron Corp. for $800 million. The deal is expected to close in the fourth quarter.
The transaction includes 80% interest in the West Texas LPG Pipeline Ltd. partnership and 100% interest in the Mesquite pipeline, which together total 2,600 miles of NGL gathering pipelines extending from the Permian to East Texas and Mont Belvieu, Tex. The remaining 20% interest in West Texas LPG is owned by Martin Midstream Partners LP.
The two pipelines, to be operated by Oneok, access NGL supply from producers developing the Delaware, Midland, and Central basins in the Permian, as well as the Barnett shale, East Texas, and north Louisiana regions.
Oneok’s ownership interest in the pipelines will add 230,000 b/d of unfractionated NGL supply to the partnership’s NGL systems, and is expected to increase to 310,000 b/d through expansions based on expected producer commitments.
“This strategic acquisition immediately establishes Oneok as a significant NGL service provider in the Permian basin,” said Terry K. Spencer, Oneok president and chief executive officer, adding that the deal “will create integration and expansion opportunities for the partnership by connecting these assets to our existing NGL fractionation and storage facilities in Mont Belvieu.”
Oneok owns the third-largest NGL fractionation capacity at Mont Belvieu, with its current capacity of 235,000 b/d already set for expansion (OGJ, June 7, 2014, p. 86; OGJ Online, June 23, 2014).
Post-deal outlook
The assets will increase Oneok’s NGL gathering system by more than 60% to 6,900 miles of NGL gathering pipelines. Oneok’s gathered NGL volumes are expected to increase 40% to 800,000 b/d system-wide.
Oneok plans $8.3-9 billion in total investments during 2010-16 for acquisitions and capital-growth projects related to natural gas gathering and processing and NGLs.
Those investments consist of $4.5 billion for natural gas gathering and processing projects, and $4.1 billion for natural gas liquids projects.
Oneok has a $3-4 billion backlog of unannounced growth projects that it continues to evaluate. The company in September reported plans to invest $480-680 million between now and the end of third-quarter 2016 to construct natural gas processing facilities and related systems in North Dakota and Wyoming (OGJ Online, Sept. 22, 2014).
