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Released May 01, 2020 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--While midstream company ONEOK Incorporated (NYSE:OKE) (Tulsa, Oklahoma) recently wrapped up several major projects, the company is pressing the pause button on others. ONEOK has announced two reductions in planned 2020 capital expenditures (capex) since the COVID-19 pandemic began and now expects capex for the year to be in the range of $1.4 billion to $1.8 billion, $900 million of which was spent in the first quarter, leaving approximately 40% for the remaining three quarters.
ONEOK is prepared to lower capex even more if necessary. In this week's earnings conference call, Chief Financial Officer Walt Hulse said, "Looking ahead, we can continue to significantly scale back capital. If commodity prices remain depressed and producer activities remain low, we could potentially operate in a $300 million to $400 million annual capital expenditure range, which would include limited routine growth spent in alignment with our producers' needs and maintenance capital. Our flexibility to scale back capital and to adjust to our customers' needs is a significant financial tool we can use in this environment to help preserve balance sheet strength and liquidity."
ONEOK reported a first-quarter 2020 net loss of $141.9 million, compared with net earnings of $337.2 million in the prior-year quarter.
ONEOK front-loaded this year's capital spending into the first quarter with the completion of major growth projects. Among these was the completion of the Arbuckle II natural gas liquids (NGL) pipeline from Oklahoma to its fractionation facility in Mont Belvieu, Texas. The 530-mile pipeline will transport up to 400,000 barrels per day (BBL/d) of unfractionated NGLs. Construction began in early 2019, with Venables Construction (Amarillo, Texas) and WHC Energy Services (Broussard, Louisiana) as general contractors. For more information, see Industrial Info's project reports on the Oklahoma and Texas portions of the pipeline.
Other projects completed in the just-passed quarter include the MB-4 NGL fractionator at the company's complex in Mont Belvieu, where it also has paused a project. The 125,000-BBL/d MB-4 fractionator brings total site capacity to 275,000 BBL/d. Construction of a fifth fractionator, MB-5, will add a further 125,000 BBL/d of fractionation capacity, but the project has been halted until market conditions improve. Construction on MB-5 began early last year and was originally planned for completion soon, but this has now been pushed out closer to the end of the year. Burns & McDonnell Incorporated (Kansas City, Missouri) is providing engineering, procurement and construction (EPC) on both fractionators. For more information, see Industrial Info's project reports on MB-4 and MB-5.
Also stopped is the 200 million-cubic-feet-per-day expansion of the company's Bear Creek natural gas processing plant in North Dakota's Williston Basin, where associated gas output from oil production has declined with deteriorating market conditions. Chief Operating Officer Kevin Burdick said, "Given the significant backlog of flared gas (in North Dakota), total production won't have to recover fully for our processing capacity to be highly utilized. Based on the latest reported natural gas flaring data out of North Dakota, approximately 400 million cubic feet per day was flaring in the basin, with more than 200 million of that on ONEOK's dedicated acreage." Construction of Bear Creek Train 2 began in third-quarter 2019, with Optimized Process Designs LLC (Katy, Texas) providing EPC. For more information, see Industrial Info's project report.
Despite its pullback of major projects, ONEOK remains resilient and is spotting rising opportunities. Burdick said, "Our system-wide propane plus fractionation capacity remains highly utilized at approximately 85% to 90%, and over half of our 27 million barrels of underground NGL storage is available to capture opportunities in the market. We're adding 1.5 million barrels of storage in the third quarter of this year and expect to complete an additional 1.5 million barrels of storage in 2021."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
ONEOK is prepared to lower capex even more if necessary. In this week's earnings conference call, Chief Financial Officer Walt Hulse said, "Looking ahead, we can continue to significantly scale back capital. If commodity prices remain depressed and producer activities remain low, we could potentially operate in a $300 million to $400 million annual capital expenditure range, which would include limited routine growth spent in alignment with our producers' needs and maintenance capital. Our flexibility to scale back capital and to adjust to our customers' needs is a significant financial tool we can use in this environment to help preserve balance sheet strength and liquidity."
ONEOK reported a first-quarter 2020 net loss of $141.9 million, compared with net earnings of $337.2 million in the prior-year quarter.
ONEOK front-loaded this year's capital spending into the first quarter with the completion of major growth projects. Among these was the completion of the Arbuckle II natural gas liquids (NGL) pipeline from Oklahoma to its fractionation facility in Mont Belvieu, Texas. The 530-mile pipeline will transport up to 400,000 barrels per day (BBL/d) of unfractionated NGLs. Construction began in early 2019, with Venables Construction (Amarillo, Texas) and WHC Energy Services (Broussard, Louisiana) as general contractors. For more information, see Industrial Info's project reports on the Oklahoma and Texas portions of the pipeline.
Other projects completed in the just-passed quarter include the MB-4 NGL fractionator at the company's complex in Mont Belvieu, where it also has paused a project. The 125,000-BBL/d MB-4 fractionator brings total site capacity to 275,000 BBL/d. Construction of a fifth fractionator, MB-5, will add a further 125,000 BBL/d of fractionation capacity, but the project has been halted until market conditions improve. Construction on MB-5 began early last year and was originally planned for completion soon, but this has now been pushed out closer to the end of the year. Burns & McDonnell Incorporated (Kansas City, Missouri) is providing engineering, procurement and construction (EPC) on both fractionators. For more information, see Industrial Info's project reports on MB-4 and MB-5.
Also stopped is the 200 million-cubic-feet-per-day expansion of the company's Bear Creek natural gas processing plant in North Dakota's Williston Basin, where associated gas output from oil production has declined with deteriorating market conditions. Chief Operating Officer Kevin Burdick said, "Given the significant backlog of flared gas (in North Dakota), total production won't have to recover fully for our processing capacity to be highly utilized. Based on the latest reported natural gas flaring data out of North Dakota, approximately 400 million cubic feet per day was flaring in the basin, with more than 200 million of that on ONEOK's dedicated acreage." Construction of Bear Creek Train 2 began in third-quarter 2019, with Optimized Process Designs LLC (Katy, Texas) providing EPC. For more information, see Industrial Info's project report.
Despite its pullback of major projects, ONEOK remains resilient and is spotting rising opportunities. Burdick said, "Our system-wide propane plus fractionation capacity remains highly utilized at approximately 85% to 90%, and over half of our 27 million barrels of underground NGL storage is available to capture opportunities in the market. We're adding 1.5 million barrels of storage in the third quarter of this year and expect to complete an additional 1.5 million barrels of storage in 2021."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
