ONEOK announces second expansion of the West Texas LPG Pipeline System
TULSA, Okla., /PRNewswire/ -- ONEOK, Inc. announced plans to invest approximately $295 million to expand its West Texas LPG Limited Partnership (West Texas LPG) pipeline system, which provides natural gas liquids (NGL) takeaway capacity for Permian Basin producers.
The expansion project, which is expected to be completed in the first quarter 2020, is supported by long-term dedicated NGL production from six third-party natural gas processing plants in the Permian Basin that are expected to produce up to 60,000 barrels per day (bpd) of NGLs.
The expansion includes the construction of:
- Four new pump stations, two pump station upgrades and pipeline looping that will increase the West Texas LPG mainline capacity by 80,000 bpd.
- Additional infrastructure to connect West Texas LPG with ONEOK's previously announced Arbuckle II Pipeline project.
"This second expansion of the West Texas LPG Pipeline system will serve continued growth in the Permian Basin and positions ONEOK for additional future expansion opportunities in the Permian," said Terry K. Spencer, ONEOK president and chief executive officer.
Based on the initial contracted volume, the expansion project is expected to generate an adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) multiple of four to six times. ONEOK continues discussions with producers and processors in the region for additional potential volume commitments.
ONEOK's previously announced 110,000 bpd pipeline lateral extension of the West Texas LPG system into the Delaware Basin and expansion of the existing mainline system is currently under construction and expected to be in service this month.
The West Texas LPG Pipeline is an NGL pipeline system that provides takeaway capacity to Permian Basin producers and consists of approximately 2,600 miles of NGL pipeline in Texas and New Mexico. The system provides transportation services to the Mont Belvieu market center from nearly 40 third-party natural gas processing plants located in the Permian Basin. The Permian Basin in southeastern New Mexico and western Texas is the largest crude oil and natural gas producing basin in the U.S.
As discussed in the HPI Market Data 2019 report, published in November by Gas Processing & LNG’s sister publication, Hydrocarbon Processing, rising propane and ethane supplies in the US have been enabled by greater production of shale gas.
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