ONEOK To Proceed With Expansion Project for Denver-Bound Products System

Strong demand for refined products (especially jet fuel) in Arizona and refinery closures in Southern California have spurred the development of a new refined products pipeline from West Texas to the Phoenix area. ONEOK, whose acquisition of Magellan Midstream Partners made it a player in refined products, has announced an open season for the proposed Sun Belt Connector pipeline, which would expand PADD 2 and PADD 3 refiners’ access to premium markets out West. In today’s RBN blog, we discuss ONEOK’s plan and how it could impact refined products markets. 

It’s no secret that the political and regulatory environments for new pipeline development in New York and the New England states are notoriously challenging. That reputation has been reaffirmed recently, as several natural gas pipeline projects targeting the region have been sidelined by permitting delays or denials. As a result the region continues to experience gas transportation constraints and price spikes during peak demand periods. But midstreamers have had some success penetrating the New York City metropolitan market (including the Lower Hudson Valley, Long Island and northern New Jersey), which may bode well for the handful of projects currently looking to serve the area. Today, we review recent and planned capacity additions into The Big Apple and its greater metro area.

Midstreamers have been struggling to keep processing and natural gas pipeline constraints at bay in Oklahoma’s SCOOP/STACK plays, and the situation hasn’t gotten any easier in the past 18 months or so. Associated gas production from the Cana-Woodford has surpassed expectations, climbing 1 Bcf/d in that time to new highs near ~4.5 Bcf/d. Efforts by pipeline operators to keep pace with production gains have largely been on a piecemeal basis, mostly to tie in processing plants or modify/expand existing systems. Cheniere Energy’s Midship Project is looking to change that. The greenfield project, which received its final notice to proceed with construction from the Federal Energy Regulatory Commission (FERC) late last month, will level-shift takeaway capacity out of Oklahoma up by 1.44 Bcf/d in one fell swoop by the end of 2019. Today’s blog provides an update on Midship and other expansions in the region.