ONEOK Suspends Expansion Projects Amid Oil Price Collapse
(P&GJ) — ONEOK has suspended key expansion projects as the price of oil has continued to drop amid fears of a slowing global economy due to the coronavirus.
Suspended projects include the 100,000 barrel per day (bpd) additional expansion of the West Texas LPG pipeline in the Permian Basin, the 200 million cubic feet per day (MMcf/d) expansion of the Demicks Lake natural gas processing facility and the Demicks Lake III project, along with related infrastructure in the Williston Basin.
Additionally, the scope of the Elk Creek Pipeline expansion will be reduced, with the ability to add pump stations incrementally to meet customer needs as necessary.
The suspension of these projects is part of a larger decrease in the company’s 2020 growth capital guidance due to the current commodity price environment.
ONEOK now expects capital-growth expenditures in the range of $1.60 billion to $2.40 billion with a midpoint of $2.0 billion, a decrease of approximately $500 million compared with the previously announced midpoint.
"Given the significant inventory of flared natural gas in the Williston Basin and fully contracted growth in the Permian Basin, and factoring in the current commodity price environment and assumed rig reductions, we expect our 2020 results to be within our previously announced guidance ranges," said Terry K. Spencer, ONEOK president and chief executive officer.
"The potential for ethane recovery to meet downstream pipeline BTU specifications also provides a tailwind to our natural gas liquids volume expectations," he said. "The planning and work we have already completed allow us to quickly resume these suspended capital-growth projects when the environment improves and our customers require these services.
"We will remain focused on operating our assets safely, reliably and environmentally responsibly," continued Spencer. "We have uniquely positioned strategic assets and a long, rich history of our dedicated and experienced employees providing quality service to and creating value for our customers, communities and shareholders."
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