Oneok plans NGL expansions, reports increased 2019 earnings

Oneok Inc. plans to expand its 240,000-b/d Elk Creek NGL pipeline, serving Williston and Powder River basins, to 400,000 b/d by adding 10 pump stations. A fully-contracted 100,000-b/d expansion of Oneok’s West Texas LPG pipeline in the Permian basin is also planned as is a 200-MMcfd expansion of its Demicks Lake natural gas processing plant in Williston basin.

The Elk Creek pipeline expansion will cost $305 million, with incremental capacity becoming available early-2021 and the full 400,000 b/d in third-quarter 2021. The expansion is supported by long-term dedicated NGL production from Oneok and third-party gas processing plants.

The West Texas LPG pipeline expansion will cost $310 million and be completed second-quarter 2021. West Texas LPG is a roughly 2,600-mile pipeline that transports unfractionated NGL from the Permian basin, in southeastern New Mexico and west Texas, the Barnett shale in central Texas and the Haynesville shale in east Texas to multiple fractionation and storage sites in Mont Belvieu, Tex.

The 200-MMcf/d expansion of the Demicks Lake gas processing plant in McKenzie County, ND, will increase total capacity at the site to 600 MMcfd. The expansion and related infrastructure are expected to cost a total of $305 million and be completed third-quarter 2021. The expansion is supported by acreage dedications with primarily fee-based contracts.

Oneok’s net income increased 9% in fourth-quarter 2019 and 11% for the full year, compared with the same periods in 2018. Higher 2019 results were driven primarily by NGL and natural gas volume growth, higher average fee rates in NGL and natural gas gathering and processing segments, and increased transportation services in the natural gas pipelines segment, compared with full-year 2018.

Lower earnings from optimization and marketing due to wider location price differentials in 2018 in the NGL segment combined with higher employee-related costs associated with the growth of Oneok's operations and higher third-party transportation and fractionation costs in the NGL segment to offset these gains. Higher depreciation expense due to completed growth projects, narrower product price differentials in the NGL segment and lower realized NGL and natural gas prices in the natural gas gathering and processing segment also impacted 2019 results.