Analyzing ONEOK’s Capital Project Backlog



ONEOK’s capital projects

Currently, ONEOK (OKE) has nearly $4.2 billion of capital projects in various development stages. Nearly $3.6 billion of the projects are natural gas liquids projects, while ~$600 million of the projects relate to gathering and processing. These projects are expected to become operational over the next two years.

The above table shows ONEOK’s key upcoming NGL (natural gas liquids) growth projects.

Key projects

ONEOK’s $1.4 billion Elk Creek pipeline project connects Williston Basin production to the Mid-Continent. The NGL pipeline is expected to have an initial capacity of 240,000 bpd (barrels per day). The project is supported by long-term contracts including minimum volume commitments. The project has an expected adjusted EBITDA multiple of 4x–6x. The project is expected to be operational by the end of 2019.

The Arbuckle II pipeline is an NGL pipeline from the Mid-Continent to the Gulf Coast. The pipeline has an initial capacity of 400,000 bpd. More than half of the pipeline’s initial capacity is supported by long-term and fee-based contracts. The project is expected to be complete in early 2020. The MB-4 fractionator in Mont Belvieu is also expected to come in service in early 2020. The two projects have expected EBITDA multiples of 4x–6x.

Gathering and processing project

ONEOK is constructing the Demicks Lake plant with 200 million cubic feet per day of natural gas processing capacity in McKenzie County, North Dakota. With an expected EBITDA multiple of 4x–6x, the project is expected to become operational by the end of 2019.

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