ONEOK Partners, L.P.
) has announced to halt its Bakken Crude Express Pipeline project
due to disappointing response from the recently concluded open
season for this project.
ONEOK PARTNERS (OKS): Free Stock Analysis
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The partnership announced an open season process, from September
21, 2012 to November 20, 2012, for this pipeline project. This
season offered the prospective shippers a chance to enter into
long-term transportation agreements with ONEOK Partners for
priority crude oil transportation facilities.
The Bakken Crude Express Pipeline would have been a 1,300-mile
long pipeline, having a transportation capacity of 200,000
barrels per day ("bpd") of light-sweet crude oil from the Bakken
Shale and Three Forks at the Williston Basin in North Dakota to
the market hub at Cushing, Oklahoma. The partnership intended to
invest $1.5 billion - $1.8 billion till completion of this
project in the middle of 2015.
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.
Apart from ONEOK Partners, another pipeline major
Plains All American Pipeline, L.P.
) 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.
Though inadequate contracts have compelled ONEOK Partners to stop
its crude oil pipeline project, it does not deter the partnership
to carry on with its other development projects in Bakken Shale.
Although the partnership decreased its 2013 capital expenditures
estimate to $2.2 billion from $2.6 billion, it still has
projected investment plan of $4.2 billion - $4.8 billion for
natural gas and NGL projects. Many of these in-progress projects
are based in the Bakken Shale.
ONEOK Partners remains committed to provide infrastructure and
transportation related services to the Williston Basin producers.
The partnership has started another open season for its Bakken
NGL Pipeline from November 19, 2012 to December 17, 2012. The
partnership still expects its future growth to primarily come
from the Bakken Shale and the Mid-Continent region.
Despite a set back in the Bakken Crude Express Pipeline, ONEOK
Partners expects to increase its earnings before interest, taxes,
depreciation and amortization ("EBITDA") by an average of 17% to
21% annually between 2012 and 2015 compared with its earlier
projection of 2012 EBITDA. In addition, the partnership's
estimated average annual distributions to unitholders are
expected to increase by 10% to 15% between 2012 and 2015.
Tulsa, Oklahoma-based ONEOK Partners, L.P. is one of the largest
publicly traded master limited partnerships and a leader in
gathering, processing, storage and transportation of natural gas
in the U.S. Currently, the partnership has a market
capitalization of $12.90 billion and has short-term Zacks #3 Rank