There has been growing concern regarding NGL pipeline takeaway capacity out of the Williston Basin and the Niobrara — particularly the DJ Basin — over the past year, with one of the major pipes through those regions now running full. Finally, ONEOK has announced plans for the Elk Creek Pipeline, which will have an initial capacity of 240 Mb/d and be expandable to 400 Mb/d. The new pipe will transport mixed, unfractionated NGLs from eastern Montana to the Conway/Bushton fractionation hub in central Kansas, and provide long-term relief for a lot of Bakken, Powder River and Denver-Julesburg (DJ) Basin producers. But with an end-of-2019 in-service date, will the new capacity come soon enough to avert NGL takeaway constraints? Today, we discuss the Elk Creek project, the flows on existing NGL pipes to Conway/Bushton, and the growing significance of ethane as pipelines fill.
It has been a while since we blogged about Bakken and Rockies NGL pipeline takeaway capacity. Back in December 2015, we published the first of our Spotlight reports (a joint venture between RBN and East Daley Capital Advisors) and discussed the report’s highlights in No Sleep Till Bushton – Strong Fundamentals Position ONEOK To Leverage Bakken Assets. And way back in 2013, we wrote The Race Is On And It Looks Like ONEOK – Bakken NGLs Production Growth, when ONEOK announced completion of the initial phase of the Bakken NGL Pipeline.
Before getting into the potential takeaway issues that might occur between now and late 2019 when ONEOK’s new Elk Creek Pipeline is due to come into service (and possible solutions to handle those issues), let’s look at the project itself, and some of the existing NGL pipes in the broader region. Elk Creek will be an approximately 900-mile, 20-inch-diameter pipeline that will originate near the company's Riverview terminal in Richland County, MT, run south through the eastern edges of Montana and Wyoming, then cut across the northeastern corner of Colorado on its way to Bushton, KS (dashed green line in Figure 1). Initially, it will have the capacity to transport up to 240 Mb/d of unfractionated NGLs, but with additional pump facilities the capacity could be expanded to 400 Mb/d. The pipeline is anchored by long-term contracts (terms ranging from 10 to 15 years) totaling about 100 Mb/d (primarily minimum volume commitments, or MVCs).