ONEOK Partners Wraps Up 3 Projects - Analyst Blog

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ONEOK Partners L.P. ( OKS ) completed its three important projects - Bakken natural gas liquids (NGLs) pipeline, Stateline II plant and an ethane header pipeline. All the three ventures are part of the partnership's $4.7-$5.3 billion growth program through 2015.

ONEOK Partners invested $450-$550 million in its 600-mile Bakken NGL Pipeline. The pipeline will carry 60,000 barrels per day (bpd) of unfractionated NGLs from the Bakken Shale in the Williston Basin in North Dakota. to the Overland Pass Pipeline in northern Colorado. Later, NGL volumes will be transported to the partnership's Mid-Continent NGL fractionation and storage facilities in central Kansas. This is the first pipeline to deliver NGL from the Williston Basin to an NGL fractionation and storage infrastructure in the Mid-Continent and Texas Gulf Coast.

The completed Stateline II plant has a capacity to process 100 million cubic feet per day of natural gas. The partnership has spent $135-$150 million for this project, located in western Williams County, ND. Since late 2011, ONEOK Partners has completed three natural gas processing facilities in the Williston Basin, including the Garden Creek, Stateline I and Stateline II plants. The new installation will enable the partnership to increase processing capability by more than 4 times from the 2011 level.

The third project, a 12-inch diameter ethane header pipeline, cost the partnership $23 million. This new pipeline has a capacity of 400,000 bpd of purity ethane and generates a new point of interconnection between the partnership's NGL fractionation assets in the Mont Belvieu, Texas and numerous petrochemical customers. The partnership has already received contractual commitments from some petrochemical companies.

Bakken Shale is situated in western North Dakota, Eastern Montana, and Saskatchewan and Manitoba in the Williston Basin. As per a U.S. Geological Survey, Bakken Shale has 4.3 billion barrels of crude oil and 2.0 trillion cubic feet of gas and another 150 million barrels of natural gas liquids.

The Stateline II plant is in sync with the existing infrastructural development initiatives undertaken by the partnership in Bakken Shale. ONEOK Partners is in the middle of a 270-mile natural gas gathering system and a related infrastructure project in Divide County, N.D. After completion, this pipeline will gather natural gas from the operators in Bakken Shale and deliver the same to the Stateline II natural gas processing facility.

ONEOK Partners has decided to invest more in Bakken Shale to cater to the increasing demand from natural gas operators. Apart from the partnership, another pipeline major Plains All American Pipeline L.P. ( PAA ) also intends to expand its operations in this natural energy-rich region and has started construction of a cryogenic gas processing plant in this area.

To reap the benefits of the vast resources of Bakken Shale, the operators are making strategic investments in the infrastructure projects. ONEOK Partners plans to invest roughly $100 million to set up additional pumping stations on the Bakken NGL Pipeline to strengthen its coverage in the region.

This will enable the partnership to increase its capacity by 125% to 135,000 bpd. We believe that Bakken Shale will play an important role to meet the ever increasing demand for fossil fuel.

ONEOK Partners currently has a Zacks Rank #3 (Hold). Other stocks from the industry that are presently performing better include Delek Logistics Partners LP ( DKL ) and NuStar Energy L.P. ( NS ). All the stocks carry a Zacks Rank #2 (Buy).

Tulsa, OK-based ONEOK Partners is one of the largest publicly traded master limited partnerships and a leader in gathering, processing, storing and transporting natural gas in the United States.



DELEK LOGISTICS (DKL): Free Stock Analysis Report

NUSTAR ENERGY (NS): Free Stock Analysis Report

ONEOK PARTNERS (OKS): Free Stock Analysis Report

PLAINS ALL AMER (PAA): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: DKL , NS , OKS , PAA

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