Midstreamer ONEOK last week announced plans to invest roughly $1.4 billion to construct a new pipeline and related infrastructure to flow natural gas liquids (NGLs) from the Rocky Mountain region to the company’s existing Mid-Continent NGL facilities.
The Elk Creek Pipeline, a roughly 900-mile, 20-inch line expected to be completed by the end of 2019, will offer 240,000 barrels per day (BPD) of unfractionated NGLs capacity from near the company’s Riverview terminal in eastern Montana, to Bushton, Kan.
Elk Creek Pipeline alone is projected to cost roughly $1.2 billion, with related infrastructure costs expected to total approximately $200 million. The pipeline will have the capability to be expanded to 400,000 BPD via additional pump facilities.
“The existing Bakken NGL and Overland Pass Pipelines are operating at full capacity. Additional NGL takeaway capacity is critical to meeting the needs of producers who are increasing production and are required to meet natural gas capture targets in the Williston Basin,” said Terry K. Spencer, president and CEO of Tulsa, Okla.-based ONEOK.
The Elk Creek line is anchored by long-term contracts with terms ranging between 10 to 15 years totaling approximately 100,000 BPD with unnamed shippers, Kallanish Energy reports.
Based on contracts for 100,000 BPD, this project is expected to generate adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) multiples of four to six times, ONEOK said.
ONEOK expects to finance the Elk Creek Pipeline with a combination of new equity, including roughly $450 million of net proceeds received from common stock issued in 2017, with cash from operations in excess of dividends and short- and long-term borrowings.