ONEOK Partners, L.P. (NYSE:OKS) is betting on the continued development of the Bakken play in the Williston Basin, as the company invests billions to build needed midstream assets to generate growth through 2014.
ONEOK Partners, L.P. owns and operates midstream assets in the natural gas and natural gas liquids areas. These include gathering, processing and pipeline infrastructure that are essential to exploration and production operators developing oil and gas properties in the United States.
In the midst of a four year growth plan, ONEOK Partners, L.P expects to be spending between $2.7 billion and $3.3 billion, through 2014, on a number of midstream projects. This growth program comes after the company finished a $2 billion program over the 2006 to 2009 time period. The company is allocating more than 50% of this budget towards building out midstream infrastructure in the Williston Basin, where the majority of operators are working on the Bakken play.
Natural Gas Gathering And Processing
They also plan to spend between $910 million and $1.1 billion to build natural gas gathering and processing assets to serve the Bakken. One facility that is nearly completed is the Garden Creek plant in North Dakota, which will process 100 million cubic feet per day of natural gas. The company is also building the Stateline I and Stateline II facilities to process natural gas from wells in the area. These two plants will be in service in 2012 and 2013.
Natural Gas Liquids
ONEOK Partners, L.P. has also allocated between $595 million and $730 million to build natural gas liquids infrastructure to handle production from the Bakken play. Most of these funds will be used to build a pipeline to transport natural gas liquids to connect to an existing pipeline system to the south. The company is also expanding the Overland Pass Pipeline in a joint venture with Williams (NYSE:WMB) and expects this pipeline to carry up to 255,000 barrels per day, by 2013.
Another company that is investing in the midstream business is QEP Resources (NYSE:QEP), which recently completed the Blacks Fork Processing Complex in Wyoming. The company will use the facility to extract natural gas liquids from the production stream. QEP Resources expects the entire Black Forks complex to be producing as much as $150 million in annualized EBITDA, by 2013.
DCP Midstream recently announced that it would build a pipeline to transport natural gas liquids from the Permian Basin and Eagle Ford Shale play to the Gulf Coast. DCP Midstream is a joint venture owned equally by Spectra Energy (NYSE:SE) and ConocoPhillips (NYSE:COP).
The Bottom Line
Many analysts expect production in the Bakken to reach more than one million barrels per day and, if this estimate is accurate, ONEOK Partners can ride this growth and pass it on to shareholders for years to come. (For additional reading, take a look at A Guide To Investing In Oil Markets.)