ONEOK, Inc. has announced plans to construct additional natural gas liquids (NGL) and natural gas infrastructure totalling over $1bn, including:

• A new 125,000-barrel per day (bpd) NGL fractionator – MB-5 – in Mont Belvieu, Texas, and related infrastructure
• A new 200-million cubic feet per day (MMcf/d) natural gas processing facility – the Demicks Lake II plant and related infrastructure – in the Williston Basin
• An extension of ONEOK’s Arbuckle II NGL pipeline further north and additional NGL gathering infrastructure to increase capacity between the Mid-Continent market hub and Arbuckle II
• An expansion of the Arbuckle II NGL pipeline by approximately 100,000 bpd to increase total capacity up to 500,000 bpd by adding pump stations

These projects are expected to generate adjusted EBITDA multiples of four to six times. ONEOK still does not expect any equity issuances in 2018 or well into 2019.

“Continued production growth across the basins ONEOK serves requires additional NGL fractionation and natural gas processing capacity,” said Terry Spencer, ONEOK President and Chief Executive Officer. “Producers are looking for increased connectivity with the Mont Belvieu market centre, and ONEOK is competitively positioned to provide it. Recently contracted volumes support the MB-5 fractionator project, with increasing NGL production providing an opportunity for ONEOK to potentially build a future MB-6 fractionator in Mont Belvieu.

“Additional natural gas gathering and processing capacity in the Williston Basin is critical to supporting record-setting crude oil and natural gas production in North Dakota and helping producers meet regional natural gas capture targets,” added Terry. “The previously announced 200 MMcf/d Demicks Lake I plant is expected to reach capacity soon after its expected completion in the fourth quarter 2019, increasing the need for the Demicks Lake II plant.”

NGL Projects:

The new MB-5 fractionator and related infrastructure project, which includes system expansions for future additional fractionation, storage and export capabilities in Mont Belvieu, is expected to cost approximately $750m. MB-5 is fully contracted and will increase ONEOK’s total NGL fractionation capacity to more than 1 million bpd.

The Arbuckle II extension project will provide additional takeaway capacity needed to support volume growth in the STACK, and additional NGL gathering infrastructure will allow increasing volumes on the Elk Creek Pipeline access to fractionation capacity at Mont Belvieu. The project is expected to cost approximately $240m.

The 100,000 bpd expansion of Arbuckle II with additional pump facilities is expected to cost $60 million. Arbuckle II is currently under construction, with the initial 400,000 bpd of capacity expected to be complete in the first quarter 2020. Contracted capacity on Arbuckle II is now more than 300,000 bpd.

All of the above NGL projects are expected to be completed in the first quarter 2021.

Demicks Lake II plant and related infrastructure:

The Demicks Lake II natural gas processing plant and related infrastructure in McKenzie County, North Dakota, are expected to cost a total of approximately $410m and be completed in the first quarter of 2020. The 200-MMcf/d plant is supported by acreage dedications with primarily fee-based contracts.

The Demicks Lake I and II plants are expected to contribute additional NGL volumes to ONEOK’s NGL gathering system and natural gas volumes to ONEOK’s 50 percent-owned Northern Border Pipeline.

Following the project’s completion, ONEOK’s Williston Basin natural gas processing capacity will increase to more than 1.4 billion cubic feet per day.

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