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Shales Behind $1B in ONEOK NGL Infrastructure Plans

Natural gas liquids (NGL) production from the Woodford Shale, Cana-Woodford Shale and Granite Wash, as well as NGL market developments in the Gulf Coast, have inspired ONEOK Partners LP to announce plans to spend $910 million to $1.2 billion between now and late 2013 on new liquids infrastructure.

The projects planned are:

"These projects will accommodate the growing NGL supplies in the Midcontinent and elsewhere and help alleviate the infrastructure constraints between the Midcontinent and Gulf Coast markets, while meeting the requirements of natural gas processors and NGL customers," said ONEOK Partners COO Terry K. Spencer.

Supply commitments, which are in various stages of negotiation for both the new pipeline and fractionator, would be anchored by NGL production from third-party processors, the partnership said.

The new Sterling III Pipeline would cost $610-810 million and would have an initial capacity to transport 193,000 b/d of either unfractionated NGLs or NGL purity products from the partnership's NGL infrastructure at Medford, OK, to its storage and fractionation facilities at Mont Belvieu. Once complete, it would double the partnership's current pipeline capacity between Medford and Mont Belvieu.

The investment also includes reconfiguring the existing Sterling I and II pipelines, which currently distribute NGL purity products between the Midcontinent and Gulf Coast NGL market centers, to transport either unfractionated NGLs or NGL purity products.

"Building this new pipeline and reconfiguring our existing Sterling I and II pipelines give us the flexibility to transport and optimize the flow of unfractionated or purity NGLs through all three pipelines," Spencer said. "These pipeline projects, along with our previously announced Arbuckle Pipeline and Sterling I Pipeline expansions, further enhance our ability to transport NGLs -- either unfractionated or purity products -- to Gulf Coast markets."

When operational all three Sterling pipelines would be capable of transporting either unfractionated NGLs or purity NGL products. Construction is expected to begin in early 2013, following receipt of necessary permits and the acquisition of right-of-way. It is anticipated that a portion of the existing right-of-way on the Sterling I and II pipelines can be used. Completion is scheduled in late 2013. With additional pump stations, the Sterling III Pipeline's capacity could be expanded to 250,000 b/d.

The Sterling III Pipeline would traverse the NGL-rich Woodford Shale, which is currently under development, as well as provide transportation capacity for NGL production from the growing Cana-Woodford Shale and Granite Wash, where it can gather unfractionated NGLs from new gas processing plants that are being built as a result of increased drilling activity in these areas.

The new MB-2 fractionator would cost about $300 million to $390 million to construct and would supplement the partnership's 80% owned, 160,000 b/d MB-1 fractionator in Mont Belvieu. Its initial 75,000 b/d capacity could be expanded to 125,000 b/d to accommodate additional NGL volumes as they are added to the expanding Arbuckle Pipeline and the new Sterling III Pipeline and the Sterling I and II reconfiguration.

"The additional capacity from the new and reconfigured pipelines and the new fractionator at Mont Belvieu will enable us to better serve our petrochemical customers who are expanding their facilities or converting existing facilities to utilize price-advantaged NGL feedstocks," Spencer said.

The partnership recently submitted a permit application to build the 75,000 b/d fractionator to the Texas Commission on Environmental Quality. Following receipt of all necessary permits, construction of the fractionator is scheduled to begin in 2011 and is currently expected to be completed in mid-2013.

ISSN © 2577-9877 | ISSN © 2158-8023
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