ONEOK Affiliate Announces Joint Venture With Williams to Build Rocky Mountain Natural Gas Liquids Pipeline
May 03 2006 - 7:00AM
PR Newswire (US)
TULSA, Okla., May 3 /PRNewswire-FirstCall/ -- An affiliate of
ONEOK, Inc. (NYSE:OKE), Northern Border Partners, L.P. (NYSE:NBP),
announced today that one of its subsidiaries has entered into an
agreement with a subsidiary of Williams (NYSE:WMB) to form a joint
venture called Overland Pass Pipeline Company, LLC. The
joint-venture company will build a 750-mile natural gas liquids
(NGL) pipeline from Opal, Wyo., in the southwestern part of the
state, to the mid- continent natural gas liquids market center in
Conway, Kan., one of the nation's primary NGL distribution and
storage hubs. The pipeline will be designed to transport 110,000
barrels per day of natural gas liquids. Additional pump facilities
would increase the capacity to 150,000 barrels per day. Initially,
Northern Border Partners will own 99 percent of the joint venture
and Williams will own the remaining 1 percent, with Williams having
the option to increase its ownership to 50 percent and become
operator within two years of the pipeline becoming operational.
Northern Border Partners will manage the construction project and
be operator of the pipeline. Construction of the 14- and 16-inch
pipeline is expected to begin in the summer of 2007, with start-up
scheduled for early 2008. The pipeline project is estimated to cost
approximately $450 million. In addition, Northern Border Partners
plans to invest approximately $160 million to expand its existing
fractionation capabilities and the capacity of its natural gas
liquids distribution pipelines. Financing for both projects may
include a combination of short- or long-term debt or equity. "The
pipeline will link the high-growth NGL production area in the Rocky
Mountain region to fractionation facilities at Bushton and Conway,"
said John W. Gibson, Northern Border Partners president and chief
operating officer. "The existing infrastructure serving the region
is reaching capacity, which makes construction of a new, more
energy-efficient pipeline necessary to meet the growing demand for
NGL transportation and fractionation." As part of a long-term
agreement, Williams will dedicate its NGL production from two of
its gas processing plants in Wyoming to the joint- venture company.
Subsidiaries of Northern Border Partners will provide downstream
fractionation and transportation services. An expansion already is
underway at one of Williams' Wyoming plants. "Dedication of the
Williams production and the potential to add barrels from other NGL
producers in the Rocky Mountain region make this an attractive
investment," Gibson added. "The Overland Pass Pipeline provides
Rocky Mountain NGL producers with a viable and economical
alternative to deliver NGLs to market. It will also increase the
fee-based revenues of Northern Border Partners' natural gas liquids
and pipelines and storage segments." Total annual operating income
from the project is expected to be $63 million, with annual
depreciation cost of $20 million. Natural gas liquids are produced
by processing raw natural gas gathered from gas producers at the
well head. Once produced, the liquids must be transported to
fractionators where they are separated into purity products, such
as ethane, propane, butane and natural gasoline, which are used in
the petrochemical, petroleum refining and agricultural industries.
The proposed pipeline route will traverse 23 counties in three
states: five each in Wyoming and Colorado, and 13 in Kansas.
Because the pipeline route spans from higher to lower elevations,
the pipeline will require fewer pump stations to move the NGLs,
thereby minimizing operating costs. The pipeline will be designed,
constructed and operated using proven technology, advanced pipeline
control systems and continuous safety monitoring. The project
requires the approval of various state and federal regulatory
agencies and governments. ONEOK, Inc. is a diversified energy
company. We are the general partner and own 45.7 percent of
Northern Border Partners, L.P., one of the largest publicly traded
limited partnerships, which is a leader in the gathering,
processing, storage and transportation of natural gas in the U.S.
and owns one of the nation's premier natural gas liquids (NGL)
systems, connecting much of the natural gas and NGL supply in the
mid-continent with key market centers. ONEOK is among the largest
natural gas distributors in the United States, serving more than 2
million customers in Oklahoma, Kansas and Texas. Our energy
services operation focuses primarily on marketing natural gas and
related services throughout the U.S. ONEOK is a Fortune 500
company. For information about ONEOK, Inc. visit the Web site:
http://www.oneok.com/ . Northern Border Partners, L.P. is a
publicly traded partnership whose purpose is to own, operate and
acquire a diversified portfolio of energy assets. The Partnership
owns and manages natural gas gathering, processing, storage,
interstate and intrastate natural gas pipeline assets and one of
the nation's premier natural gas liquids (NGL) systems, connecting
much of the natural gas and NGL supply in the mid-continent with
key market centers. More information can be found at
http://www.northernborderpartners.com/ . Additional information on
the Overland Pass Pipeline venture can be found at
http://www.overlandpass.com/ . Some of the statements contained and
incorporated in this press release are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. The forward-looking statements relate to: anticipated
financial performance; management's plans and objectives for future
operations; business prospects; outcome of regulatory and legal
proceedings; market conditions and other matters. The Private
Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements in certain circumstances. The following
discussion is intended to identify important factors that could
cause future outcomes to differ materially from those set forth in
the forward-looking statements. Forward-looking statements include
the items identified in the preceding paragraph, the information
concerning possible or assumed future results of our operations and
other statements contained or incorporated in this Report on Form
10-Q identified by words such as "anticipate," "estimate,"
"expect," "forecast," "intend," "believe," "projection" or "goal."
You should not place undue reliance on forward-looking statements.
Known and unknown risks, uncertainties and other factors may cause
our actual results, performance or achievements to be materially
different from any future results, performance or achievements
expressed or implied by forward- looking statements. Those factors
may affect our operations, markets, products, services and prices.
In addition to any assumptions and other factors referred to
specifically in connection with the forward-looking statements,
factors that could cause our actual results to differ materially
from those contemplated in any forward-looking statement include,
among others, the following: * actions by rating agencies
concerning the credit ratings of ONEOK and Northern Border
Partners; * the effects of weather and other natural phenomena on
our operations, including energy sales and prices and demand for
pipeline capacity; * competition from other U.S. and Canadian
energy suppliers and transporters as well as alternative forms of
energy; * the capital intensive nature of our businesses; * the
profitability of assets or businesses acquired by us; * risks of
marketing, trading and hedging activities as a result of changes in
energy prices or the financial condition of our counterparties; *
economic climate and growth in the geographic areas in which we do
business; * the uncertainty of estimates, including accruals and
costs of environmental remediation; * the timing and extent of
changes in commodity prices for natural gas, NGLs, electricity and
crude oil; * the effects of changes in governmental policies and
regulatory actions, including changes with respect to income taxes,
environmental compliance, authorized rates or recovery of gas
costs; * the impact of recently issued and future accounting
pronouncements and other changes in accounting policies; * the
possibility of future terrorist attacks or the possibility or
occurrence of an outbreak of, or changes in, hostilities or changes
in the political conditions in the Middle East and elsewhere; * the
risk of increased costs for insurance premiums, security or other
items as a consequence of terrorist attacks; * the impact of
unforeseen changes in interest rates, equity markets, inflation
rates, economic recession and other external factors over which we
have no control, including the effect on pension expense and
funding resulting from changes in stock and bond market returns; *
risks associated with pending or possible acquisitions and
dispositions, including our ability to finance or integrate any
such acquisitions and any regulatory delay or conditions imposed by
regulatory bodies in connection with any such acquisitions and
dispositions; * the results of administrative proceedings and
litigation, regulatory actions and receipt of expected regulatory
clearances involving the OCC, KCC, Texas regulatory authorities or
any other local, state or federal regulatory body, including the
FERC; * our ability to access capital at competitive rates or on
terms acceptable to us; * the risk of a significant slowdown in
growth or decline in the U.S. economy or the risk of delay in
growth recovery in the U.S. economy; * risks associated with
adequate supply to our gathering and processing, fractionation and
pipeline facilities, including production declines which outpace
new drilling; * the risk that material weaknesses or significant
deficiencies in our internal controls over financial reporting
could emerge or that minor problems could become significant; * the
impact of the outcome of pending and future litigation; * the
possible loss of franchises or other adverse effects caused by the
actions of municipalities; * the impact of unsold pipeline capacity
being greater or less than expected; * the ability to market
pipeline capacity on favorable terms, which is affected by: -
future demand for and prices of natural gas; - competitive
conditions in the overall natural gas and electricity markets; -
availability of supplies of Canadian and United States natural gas;
- availability of additional storage capacity and weather
conditions; and - competitive developments by Canadian and U.S.
natural gas transmission peers; * orders by the FERC which are
significantly different than our assumptions related to Northern
Border Pipeline's November 2005 rate case; * performance of
contractual obligations by the customers and shippers; * the
ability to recover operating costs, costs of property, plant and
equipment and regulatory assets in our FERC regulated rates; *
timely receipt of required regulatory clearances for construction
and operation of the Midwestern Gas Transmission Eastern Extension
Project; * our ability to acquire all necessary rights-of-way and
obtain agreements for interconnects in a timely manner; * our
ability to promptly obtain all necessary materials and supplies
required for construction; * the composition and quality of the
natural gas we gather and process in our plants; * the efficiency
of our plants in processing natural gas and extracting natural gas
liquids; * renewal of our coal slurry pipeline transportation
contract under reasonable terms and our success in completing the
necessary rebuilding of the coal slurry pipeline; * the impact of
potential impairment charges; * developments in the December 2,
2001, filing by Enron of a voluntary petition for bankruptcy
protection under Chapter 11 of the United States Bankruptcy Code
affecting our settled claims; * the ability to control operating
costs; * the risk inherent in the use of information systems in our
respective businesses, implementation of new software and hardware,
and the impact on the timeliness of information for financial
reporting; * acts of nature, sabotage, terrorism or other similar
acts causing damage to our facilities or our suppliers' or
shippers' facilities; and * the other factors listed in the reports
we have filed and may file with the Securities and Exchange
Commission, which are incorporated by reference. ONEOK, Inc.
Analyst Contact: Dan Harrison 918-588-7950 Media Contact: Megan
Washbourne 918-588-7572 Northern Border Partners, L.P. Analyst
Contact: Ellen Konsdorf 877-208-7318 Media Contact: Beth Jensen
402-492-3400 DATASOURCE: ONEOK, Inc.; Northern Border Partners,
L.P. CONTACT: analysts, Dan Harrison, +1-918-588-7950, or media,
Megan Washbourne, +1-918-588-7572, both of ONEOK, Inc.; or
analysts, Ellen Konsdorf, +1-877-208-7318, or media, Beth Jensen,
+1-402-492-3400, both of Northern Border Partners, L.P. Web site:
http://www.oneok.com/ http://www.northernborderpartners.com/
http://www.overlandpass.com/
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