Bakken Pipeline Cancellation

Brian Hicks

Written By Brian Hicks

Posted November 30, 2012

Oneok Inc. (NYSE: OKE) experienced a recent setback after its subsidiary, Oneok Partners LP (NYSE: OKS), failed to secure enough oil producers to justify developing a $1.8 billion Bakken pipeline.

The pipeline, which would have linked the Bakken shale to crude oil terminals in Oklahoma, was part of Oneok’s $4.8 billion in investments to expand its network.

Shares closed down 1.5 percent at $44.88 on Wednesday after dropping 3 percent earlier.

From Businessweek:

“While we are disappointed with the results of the open season, we remain committed to serving Williston Basin producers for their natural gas, natural gas liquids and crude-oil infrastructure needs,” [President Terry] Spencer said in the statement.

The proposed Bakken Crude Express pipeline would have covered 1,300 miles and would have given Oneok access to the Montana/North Dakota shale boom.

But a Tudor Pickering Holt & Co. research note cited by Businessweek suggests that the existing widespread rail networks that allow producers to ship oil out to the East Coast, where the oil markets are priced higher, made Oneok’s project a bit unattractive.

Had the pipeline been built, it would have carried 200,000 barrels per day to an oil storage hub in Cushing, Oklahoma.

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