ONEOK will rebuild its 210 Mb/d NGL fractionator near Medford, OK, which was damaged in an explosion and fire in July 2022.
The company said this week the first phase of the $385 million project is expected to be completed in Q4 2025, followed by the second phase in Q1 2027 (see bottom blue star in map below).
The handful of midstream companies that provide a full range of “wellhead-to-water” services between the Permian and the Gulf Coast are in growth mode, advancing a long list of gas processing plants, takeaway pipelines, fractionators and export terminal expansions. Last time we looked at what Enterprise Products Partners and Energy Transfer are up to. In today’s RBN blog, we shift our spotlight to what Targa Resources and Phillips 66 are planning, with Targa building a slew of projects and P66 growing primarily through organic opportunities that have arisen following recent bolt-on M&A.
Ever-increasing production of natural gas liquids is driving another round of fractionation capacity expansions in Mont Belvieu, TX, which is—and will remain—the hub of US fractionation activity. But Mont Belvieu fractionators are not without competition. Huge increases in fractionator capacity are also coming on-line in Appalachia to handle the rising volumes of natural gas liquids (NGLs) coming out of the Marcellus and Utica. Mont Belvieu may be king of fractionation, but others want a share of the kingdom. Today we update the ongoing NGL production boom and plans to add fractionation capacity in Mont Belvieu and NGL-related export capability nearby.
The feeling is almost palpable among midstreamers: In a fast-changing energy industry, the companies that gather, transport, store and export hydrocarbons need to consolidate and augment — and be smart about how they get bigger. Scale, that’s the key. That — plus complementary assets that provide synergies, lower costs and increase free cash flow, a sizable portion of which can be returned to shareholders as dividends and buybacks — is what investors are looking for. Oh, and don’t forget this important M&A goal: gaining a larger footprint and a more prominent role in the Permian, the dominant U.S. production area. ONEOK, a midstream company heretofore primarily focused on moving NGLs and natural gas, earlier this week announced an $18.8 billion agreement to acquire Magellan Midstream Partners, which is best known for pipelines that transport refined products and crude oil. In today’s RBN blog, we and our friends at East Daley Analytics kick the tires, look under the hood, and give our thoughts on the deal’s pros and potential cons.
