$300MM Bakken Investment: ONEOK to build natural gas processing plant, expand gathering system in North Dakota

Source: ONEOK

ONEOK Partners (NYSE: OKS) plans to invest $300 million to $355 million between now and the end of 2012 in additional projects in the Bakken Shale in the Williston Basin

The ONEOK investments include $180 million to $205 million for the construction of a new 100 million cubic feet per day (MMcf/d) natural gas processing facility - the Stateline I plant - in western Williams County, N.D., and related natural gas liquids (NGL) infrastructure

In addition to the investments for the Stateline I plant and related infrastructure, ONEOK Partners also expects to invest $70 million to $90 million for expansions and upgrades to its existing gathering and compression infrastructure. ONEOK Partners also expects to invest approximately $50 million to $60 million in 2011 and 2012 for new well connections adjacent to the Stateline I facility. 

The Stateline I plant is expected to be in service during the third quarter of 2012. Another natural gas processing plant, Stateline II, is being evaluated and could add another 100 MMcf/d of capacity if additional volumes become available for processing. 

"Additional natural gas processing capacity and infrastructure are necessary as a result of increased natural gas and natural gas liquids production associated with crude oil development in the Bakken Shale," said Terry K. Spencer, ONEOK Partners chief operating officer. "Since the beginning of the year, drilling activity has increased significantly in this region as a result of favorable crude-oil economics and proven crude-oil reserves," he added. 

"The Stateline I natural gas processing plant - along with our previously announced Garden Creek plant and our existing Grasslands plant - enables us to continue to meet the needs of producers in the area and provide adequate volumes for our proposed Bakken NGL pipeline," Spencer said. 

In aggregate, the Stateline I plant and related infrastructure are expected to generate EBITDA (earnings before interest, taxes, depreciation and amortization) multiples of five to seven times. The incremental earnings from these projects are expected to increase distributable cash flow and value to unitholders in the form of higher distributions. 

When added to the partnership's existing Grasslands natural gas processing facility and the previously announced Garden Creek plant in eastern McKenzie County, N.D., scheduled for completion in the fourth quarter of 2011, the Stateline I plant will increase the partnership's natural gas processing capacity in the Williston Basin to approximately 300 MMcf/d, nearly tripling current capacity.



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