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ONEOK to construct $1.4 B NGL pipeline in Rocky Mountain region

TULSA, Okla. — ONEOK, Inc. announced plans to invest approximately $1.4 B to construct a new pipeline, and related infrastructure, to transport natural gas liquids (NGLs) from the Rocky Mountain region to the company's existing Mid-Continent NGL facilities. 

Oneok Elk Creek Pipeline Resized
Courtesy of Oneok.

The Elk Creek Pipeline—an approximately 900-mi, 20-in. diameter pipeline that is expected to be completed by the end of 2019—will have the capacity to transport up to 240,000 bpd of unfractionated NGLs from near the company's Riverview terminal in eastern Montana to Bushton, Kansas. The Elk Creek Pipeline is expected to cost approximately $1.2 B, with related infrastructure costs expected to total approximately $200 MM. The pipeline will have the capability to be expanded to 400,000 bpd with additional pump facilities.

The Elk Creek Pipeline is anchored by long-term contracts with terms ranging between 10 yr to 15 yr totaling approximately 100,000 bpd, which is supported primarily by minimum volume commitments. In the aggregate, and based on these contracts for 100,000 bpd, this project is expected to generate adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) multiples of four to six times.

ONEOK expects to finance the Elk Creek Pipeline with a combination of new equity, including approximately $450 MM of net proceeds received from common stock issued during 2017 under its "at-the-market" equity program, with cash from operations in excess of dividends and short- and long-term borrowings.

This project is part of ONEOK's $3.0 B to $3.5 B of potential capital-growth projects. Additional projects that are expected to have similar adjusted EBITDA multiples to this project, which are in the late stages of development, are expected to be announced when sufficient supply commitments are secured. ONEOK expects to finance its additional capital-growth projects in 2018 and well into 2019 with cash generated from operations and short- and long-term borrowings.


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FEATURED COLUMNS

Editorial comment
-Adrienne Blume
According to GIIGNL’s 2018 Annual Report, global LNG trade expanded by 3.5 Bft3d in 2018, to 38.2 Bft3d—a record 10% increase.
Power, LNG projects drive pipeline construction in Africa
-Shem Oirere
Increasing public investment in gas-fired power plants in Africa, the continuing recovery in global oil prices and persistent insecurity in key producer markets, such as Nigeria, are likely to impact gas transmission pipeline projects on the continent, even as more international companies express interest in the region’s stranded gas resources.


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