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.
|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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At October’s HPI Forecast Breakfast for our sister publication, <i>Hydrocarbon Processing</i>, I shared <i>Gas Processing</i>’s forecast on change in the LNG industry.
In one of the toughest markets in the history of gas compression, we are challenged to deliver more with less.
The New LNG Imperative
The shale gas boom established the US as the world’s leading natural gas producer and is responsible for billions of dollars of investments in the US gas processing industry. Since 2012, the US has witnessed unprecedented growth in new gas processing capacity and infrastructure. This rise is due to greater production of domestic shale gas, which is providing cheap, available feedstock to fuel the domestic gas processing, LNG and petrochemical industries. New gas processing projects include the construction of billions of cubic feet per day of new cryogenic and gas processing capacity, NGL fractionators, multi-billion-dollar pipeline infrastructure projects, and the development of millions of tons per year of new LNG export terminal construction. Attend this webcast to hear from Lee Nichols, Editor/Associate Publisher, Hydrocarbon Processing, Scott Allgood, Director-Data Services, Energy Web Atlas and Peregrine Bush, Senior Cartographic Editor, Petroleum Economist as they discuss the future of LNG and the application of Energy Web Atlas, a web-based GIS platform which allows users to track real-time information for every LNG project.
November 29, 2017 10am CST
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