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Oneok Entering Crude Transport With Bakken Pipeline

Oneok Partners LP plans to invest $1.5-1.8 billion to build a 1,300-mile crude oil pipeline with capacity to transport 200,000 b/d of light sweet crude from the Bakken Shale in the Williston Basin in North Dakota to the Cushing, OK, crude oil market hub, the partnership said Monday.

"As producers continue to aggressively develop crude oil from wells in the Bakken Shale, more crude oil pipeline takeaway capacity will be required," said Oneok Partners President Terry K. Spencer. "This proposed pipeline will provide producers with efficient and reliable transportation of their product directly to one of the largest crude oil market hubs in the U.S.

"It also represents our entry into the crude oil transportation business and utilizes our existing core capabilities of transporting and storing natural gas, natural gas liquids and refined petroleum products. Many of the supply commitments under negotiation are with the same producers in the Williston Basin that we currently serve."

Announcement of the Bakken Crude Express Pipeline follows Oneok's news last week that it would invest $140-160 million to build a 270-mile gas gathering system and related infrastructure in Divide County, ND, in the heart of the Bakken (see Shale Daily, April 9).

Supply commitments for Bakken Crude Express are in various stages of negotiation, the partnership said. Following receipt of permits and compliance with regulatory requirements, construction is expected to begin in late 2013 or early 2014 and be completed by early 2015. Based on supply commitments prior to construction, capacity could be increased.

The proposed pipeline route would be positioned to transport crude oil production from the Niobrara Shale, Oneok Partners said. The route is expected to parallel more than 80% of the partnership's existing and planned natural gas liquids pipelines.

The partnership has previously said it is investing $2.8-3.5 billion through 2014 in growth projects. Of these, it is investing $1.6-2 billion in projects related to the Bakken. These include a 500-mile NGL pipeline, the Bakken Pipeline; a 270-mile natural gas gathering system and related infrastructure; and three 100 MMcf/d gas processing facilities -- Garden Creek plant, Stateline I plant and Stateline II plant -- and related infrastructure. The Garden Creek plant entered service last December.

Oneok Partners said it has a $1 billion-plus backlog of unannounced projects that will be announced when sufficient supply commitments are completed.

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