Oneok Partners (OKS) (NYSE:OKE) announced plans to build a 80 MMcf/d gas processing facility in Bear County, North Dakota, to service growing natural gas production from the Bakken and Three-Forks shale plays. To support its Bear County facility, Oneok Partners is also building out gathering and compression infrastructure. This will add onto Oneok Partners' 500 MMcf/d of gas processing capacity in the area, and is a part of Oneok Partners' plan to boost its Bakken/Three-Forks gas processing capacity to 1.2 Bcf/d by 2016.
In addition to Oneok's Bear County facility, Oneok Partners is also going to build a 100 MMcf/d gas processing plant in Campbell County, Wyoming, to service NGL-rich production from the Powder River Basin. The Powder River Basin is home to the emerging Turner, Frontier, Sussex, and Niobrara shale formations. These plays hold enormous amounts of potential, and early exploration efforts by Chesapeake Energy (NYSE:CHK) pointed towards Chesapeake unlocking 1.5 billion BOE from the Niobrara and 250 million BOE from the Frontier formations alone.
While I expected that Oneok Partners would announce new gas processing plants in the Bakken/Three-Forks area due to high levels of gas flaring and new state regulations, I didn't expect it to expand in the emerging Powder River Basin plays. This news reinforces the bull thesis for why Oneok Partners is a solid income play with a long growth runway (which just got longer), as new plants will pad Oneok Partners' distributable cash flow, allowing it to boost its 5.6% yield. Those interested in how Oneok is banking on the shale revolution should take a look at Cleaner Air And Payout Growth, Oneok Has Got You Covered.
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