The Permian Basin continues to be a driving force behind U.S. oil and gas production, and ONEOK Inc. is making strategic moves to solidify its position in this critical region. During its Q4 2024 earnings call, ONEOK outlined significant infrastructure expansions, acquisitions, and future growth opportunities in the Permian. Here’s a breakdown of what was said about the company’s investments and outlook for the basin.
1. Natural Gas & NGL Infrastructure Expansion
ONEOK is expanding its natural gas and NGL (natural gas liquids) infrastructure in the Permian to capture growing production volumes.
West Texas NGL Pipeline Expansion
- The West Texas NGL pipeline is being expanded to 740,000 barrels per day (bpd) to accommodate increasing NGL production.
- ONEOK expects higher ethane recovery rates, further increasing the volumes transported.
- The pipeline expansion will be completed in 2025, ensuring ample capacity for long-term growth.
During the earnings call, Sheridan Swords, ONEOK’s Executive Vice President, noted, “We expect recently completed and connected third-party processing plants, new contracts, and increasing volume from legacy EnLink plants to contribute to higher volumes feeding our West Texas NGL pipeline.”
Natural Gas Processing Capacity Growth
- ONEOK is relocating a 150 MMcf/d natural gas processing plant from North Texas to the Permian Basin.
- This move supports the company’s growing gas gathering and processing footprint.
- Total Permian gas processing volumes are projected to reach ~1.6 Bcf/d in 2025.
- As Permian associated gas production continues to rise, ONEOK is evaluating additional processing expansions.
2. Crude Oil Infrastructure & Market Integration
ONEOK’s crude oil transportation and gathering capabilities in the Permian have been significantly strengthened by recent acquisitions.
Crude Gathering & Pipeline Expansion
- ONEOK has integrated crude gathering and transportation assets from the Medallion and EnLink acquisitions.
- The company plans to fill existing gathering capacity, which will support higher throughput on its long-haul crude pipelines.
- ONEOK is also optimizing crude marketing strategies, allowing it to capture more Permian crude volumes.
Swords added, “We expect to fill the existing gathering capacity over time, which will feed and fill our long-haul crude oil pipelines, connecting key supply areas with critical refining and marketing centers.”
Synergies Between EnLink & Medallion Assets
- Blending and optimization efforts between EnLink and Medallion assets are unlocking new efficiencies.
- The integration of crude trucking and terminal locations has reduced costs and improved crude logistics.
- This synergy allows for lower-cost crude transportation and higher margins.
3. Permian’s Role in ONEOK’s LPG Export Strategy
The Permian Basin plays a crucial role in ONEOK’s NGL export growth, especially with the company’s new LPG export terminal joint venture with MPLX.
Texas City LPG Export Terminal
- 400,000 bpd LPG export terminal being developed in Texas City, Texas.
- Provides a wellhead-to-water solution, connecting Permian NGL production to global markets.
- Offers premier open-water access, reducing shipping delays compared to other Gulf Coast export facilities.
- Scheduled for completion in early 2028, with expansion potential beyond 400,000 bpd.
Swords explained, “We have been looking at this for a long time. We’ve been intentional and disciplined about going forward with this type of project. This dock, along with the expanded West Texas NGL system, will enhance our wellhead-to-water strategy across our entire system.”
4. Strong Permian Producer Activity & Future Growth
ONEOK reported strong drilling activity and producer demand in the Permian, driven by:
- More efficient well completions and longer lateral drilling.
- Higher associated gas production, boosting NGL and gas volumes.
- Continued demand for natural gas transportation and processing services.
Additionally, Permian natural gas supply will support growing U.S. LNG exports, which are expected to increase from 16 Bcf/d today to nearly 30 Bcf/d in the coming years.
Pierce H. Norton, ONEOK’s President & CEO, emphasized, “The demand tailwinds we’re seeing in the industry—whether it’s LNG exports, growing natural gas needs, or petrochemical expansion—are all factors that point to the Permian as a key growth engine for us.”
5. Future Opportunities & Potential Expansions
ONEOK hinted at potential additional infrastructure investments in the Permian:
- More pipeline connectivity and debottlenecking projects.
- Additional crude and NGL gathering expansions.
- Optimized trucking and terminal networks to further cut costs and improve efficiencies.
- More synergies between newly acquired assets, increasing profitability.
Conclusion: ONEOK’s Commitment to Permian Growth
ONEOK’s strategic investments in the Permian Basin demonstrate its commitment to long-term growth in the region. With expansions in natural gas processing, NGL transportation, crude gathering, and LPG exports, the company is well-positioned to capture future production growth and rising global energy demand.
As ONEOK continues to integrate its recent acquisitions and optimize operations, the Permian Basin remains a core driver of its success. Investors and industry stakeholders should keep an eye on how these infrastructure developments impact ONEOK’s revenue and market positioning in 2025 and beyond.
