OneOK Investing in Natural Gas Liquids

nvestments Include $450-$550 Million for Bakken NGL Pipeline; Related Expansions of Mid-Continent Fractionator and Overland Pass Pipeline

TULSA, Okla., July 26 /PRNewswire-FirstCall/ -- ONEOK Partners, L.P. (NYSE: OKS) today announced plans to build approximately $595 million to $730 million of natural gas liquids (NGL) projects between now and 2013.  

The preliminary cost estimates for the new projects are:

• $450 million to $550 million to build a 525- to 615-mile NGL pipeline that will transport unfractionated NGLs from the Bakken Shale in the Williston Basin in North Dakota to the partnership's Overland Pass Pipeline, a 760-mile NGL pipeline extending from southern Wyoming to Conway, Kan.;
• $35 million to $40 million for related capacity expansions for ONEOK Partners' anticipated 50-percent interest in the Overland Pass Pipeline to transport the additional unfractionated NGL volumes from the new Bakken Pipeline; and
• $110 million to $140 million to expand the partnership's fractionation capacity at Bushton, Kan., by 60,000 barrels per day to accommodate the additional NGL volumes.  

In aggregate, these projects are expected to generate EBITDA (earnings before interest, taxes, depreciation and amortization) multiples of five to seven times.  The incremental fee-based earnings from these projects are expected to increase distributable cash flow and value to unitholders.

"As producers continue to aggressively develop NGL-rich natural gas production from crude oil-producing wells in the Bakken Shale and Three Forks formations, natural gas liquids takeaway capacity is required," said Terry K. Spencer, ONEOK Partners chief operating officer.

The proposed Bakken Pipeline will initially transport up to 60,000 barrels per day (bpd) of unfractionated NGL production from ONEOK Partners' extensive natural gas gathering and processing assets in the Bakken Shale and from third-party natural gas processing plants south through western North Dakota and eastern Montana to Wyoming, where it will connect to the Overland Pass Pipeline near Cheyenne, Wyo.  The volumes will then be delivered to ONEOK Partners' existing NGL infrastructure in the Mid-Continent.  Additional pump facilities could increase the new pipeline's capacity to 110,000 bpd.  

Supply commitments for the Bakken Pipeline will be anchored by NGL production from ONEOK Partners' natural gas processing plants and from third-party processors, which are in various stages of negotiation.

Following receipt of all necessary permits, construction of the 12-inch diameter pipeline will begin in the second quarter of 2012 and is currently expected to be complete during the first half of 2013.  

The additional raw NGL volumes from the new Bakken Pipeline and other supply sources under development in the Rockies will require an investment of $35 million to $40 million for ONEOK Partners' anticipated 50-percent interest in the Overland Pass Pipeline for additional pump stations and the expansion of existing pump stations, increasing its capacity to the maximum of 255,000 bpd.  

The partnership also will invest $110 million to $140 million to expand and upgrade its existing fractionation capacity atBushton, increasing its capacity up to 210,000 bpd from 150,000 bpd.  The fractionator was expanded to its current capacity inJune 2008.

The Bakken Pipeline project and related expansions follow ONEOK Partners' April 2010 announcement of more than $400 million of new growth projects in the Bakken Shale, including the construction of a new 100 million cubic feet per day natural gas processing facility in eastern McKenzie County in North Dakota – the Garden Creek Plant – that will double the partnership's processing capacity in the region.   ONEOK Partners is the largest independent operator of natural gas gathering and processing facilities in the Bakken Shale region, with a gathering system of more than 3,500 miles.

ONEOK Partners owns a natural gas liquids system in the Mid-Continent and Gulf Coast, which includes fractionators and storage in Mont Belvieu, Texas; Bushton, Conway and Hutchinson, Kan.; and Medford, Okla.  It also owns interstate natural gas liquids distribution pipelines between Conway and Mont Belvieu, and NGL and refined petroleum products distribution pipelines that connect its Mid-Continent NGL infrastructure to Midwest markets, including Chicago.