Oneok Partners has joined Plains All American in rolling out plans to cash in on natural gas that is currently going up in flames in the Bakken.
It has announced the first phase of a 270-mile gas gathering system and related infrastructure costing up to $160 million in North Dakota’s Divide and Williams counties, following Plains decision earlier this year to build a processing plant at Ross.
Oneok has even larger goals in mind for the Divide County plant, planning to invest up to $1.8 billion in Bakken projects over the next three years, including a natural gas liquids pipeline and three processing plants.
“This project is the latest example of our ongoing commitment to reduce the amount of natural gas being flared in the Bakken Shale,” said ONEOK Partners president Terry K. Spencer.
The system, due for completion in the second half of 2013, will collect and deliver gas to the partnership’s previously announced 100 million cubic feet per day Stateline II processing facility in Williams County, expected to be in service in the first half of 2013.
Oneok said it has already secured long-term commitments from producers structured with percent-of-proceeds and fee-based components.
Spencer said Oneok’s objective is to give producers in the Bakken and Three Forks formations “the infrastructure they need to process and deliver gas to the marketplace.”
The partnership estimates the gathering system and infrastructure will generate EBITDA (earnings before interest, taxes, depreciation and amortization) multiples of five to seven times.
The incremental earnings from the projects are expected to increase distributable cash flow and value to unitholders.
Oneok said the next phase of growth projects include a 500-mile gas liquids pipelines and three 100 million cubic feet per day processing facilities.
Completion of the Divide County gathering system will provide the infrastructure to fill all four of the partnership’s processing plants in the Bakken and Three Forks formations.
Oneok has more than 3,500 miles of gas gathering systems in the Williston basin and dedications of more than 2.2 million acres.
—Gary Park
