... ONEOK Expands Permian Basin Capacity to Serve Mexico

ONEOK Partners Expands Permian Basin Capacity to Serve Mexico

ONEOK Partners LP is looking to boost capacity on its WesTex Transmission intrastate natural gas pipeline system to better serve markets in Mexico. The company announced July 30 that it plans to invest $70 million to $100 million to expand the WesTex system by increasing throughput capacity by 260 million cubic feet per day (MMcf/d) of natural gas by the first quarter 2017.

“This expansion project is complementary to our recently announced Roadrunner Gas Transmission pipeline project,” said Terry K. Spencer, president and CEO of ONEOK Partners. “These integrated assets will provide markets in Mexico access to upstream supply basins in West Texas and the Mid-Continent, which adds location and price diversity to their supply mix.”

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The WesTex expansion project, located in the Texas Panhandle and the Permian Basin in West Texas, includes the construction of two new compressor stations and upgrades or expansions to three existing compressor stations. Total added horsepower is expected to be approximately 38,800. With qualifying open season bids in excess of 500 MMcf/d, ONEOK WesTex will use 240 MMcf/d of existing capacity and create additional capacity by expanding its system by 260 MMcf/d. Ninety percent of this total available capacity was subscribed with firm take-or-pay agreements through an open season process that completed earlier this year in February.

The Comisión Federal de Electricidad (CFE), Mexico’s national electric utility, has agreed to be the anchor shipper and has subscribed to firm capacity (take-or-pay) for a 25-year term. CFE generates, distributes and markets electric power for almost 35.3 million customers in Mexico. According to the CFE, this long-term transportation position supports CFE’s strategy to bring natural gas to Mexico, which is a cleaner and less expensive fuel alternative for power generation in Mexico.

“Through the Roadrunner project, we are pleased to have developed a strategic relationship with the CFE,” Spencer added. “This expansion of ONEOK’s WesTex pipeline system will deepen this relationship while adding an additional source of fee-based earnings to ONEOK Partners.”

The capacity is available in two phases. The first phase of capacity is approximately 100 MMcf/d and will be available in the first quarter 2016. The second phase of capacity is approximately 400 MMcf/d and will be available in the first quarter 2017.

ONEOK WesTex Transmission is an intrastate natural gas pipeline system operating within Texas, consisting of approximately 2,227 miles of pipeline. This project is subject to receipt of customary governmental approvals.

The Roadrunner Gas Transmission pipeline project is a 50-50 joint venture with a subsidiary of Fermaca Infrastructure B.V., a Mexico City-based natural gas infrastructure company that will transport natural gas from the Permian Basin in West Texas to Mexico. It includes approximately 200 miles of new, 30-in. diameter pipeline currently designed to transport up to 640 MMcf/d of natural gas, with up to 570 MMcf/d to be transported to Mexico’s growing markets. The pipeline will extend from ONEOK WesTex’s natural gas pipeline system at Coyanosa, Texas, west to a new international border-crossing connection at the U.S. and Mexico border near San Elizario, Texas.

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