ONEOK Partners LP (NYSE: OKS) plans to invest $70 million to $100 million to expand its ONEOK WesTex Transmission intrastate natural gas pipeline system by increasing its throughput capacity by 260 million cubic feet per day (MMcf/d) of natural gas by the first quarter of 2017.
"This expansion project is complementary to our recently announced Roadrunner Gas Transmission pipeline project,” said Terry K. Spencer, president and CEO of ONEOK Partners. “These integrated assets will provide markets in Mexico access to upstream supply basins in West Texas and the Mid-Continent, which adds location and price diversity to their supply mix."
The ONEOK WesTex expansion project, located in the Texas Panhandle and the Permian Basin in West Texas, includes the construction of two new compressor stations and upgrades or expansions to three existing compressor stations. Total added horsepower is expected to be approximately 38,800.
ONEOK WesTex, which had qualifying open season bids in excess of 500 MMcf/d, will utilize 240 MMcf/d of existing capacity and create additional capacity by expanding its system by 260 MMcf/d. Ninety percent of this total available capacity was subscribed with firm take-or-pay agreements through an open season process that ran from Feb. 2 to Feb. 27.
The Comision Federal de Electricidad (CFE), Mexico's national electric utility, has agreed to be the anchor shipper and has subscribed to firm capacity (take-or-pay) for a 25-year term. CFE generates, distributes and markets electric power for almost 35.3 million customers in Mexico. According to the CFE, this long-term transportation position supports CFE's strategy to bring natural gas to Mexico.
The capacity is available in two phases. The first phase of capacity is approximately 100 MMcf/d and will be available in the first quarter of 2016. The second phase of capacity is approximately 400 MMcf/d and will be available in the first quarter of 2017.
ONEOK WesTex Transmission is an intrastate natural gas pipeline system operating within Texas, consisting of approximately 2,227 miles of pipeline. This project is subject to receipt of customary governmental approvals.
The Roadrunner Gas Transmission pipeline project is a 50-50 joint venture with a subsidiary of Fermaca Infrastructure BV (Fermaca), a Mexico City-based natural gas infrastructure company that will transport natural gas from the Permian Basin in West Texas to Mexico. It includes 200 miles of new, 30-inch-diameter pipeline designed to transport up to 640 million cubic feet per day (MMcf/d) of natural gas, with up to 570 MMcf/d to be transported to Mexico's growing markets. The pipeline will extend from ONEOK WesTex's natural gas pipeline system at Coyanosa, Texas, west to a new international border-crossing connection at the US and Mexico border near San Elizario, Texas.