The Permian Basin remains one of the most critical regions for U.S. oil and gas production, and ONEOK Inc. is doubling down on its investments in the area. With rising production volumes, major midstream and pipeline expansions, and a growing focus on exports, the company is positioning itself to capture long-term value. ONEOK is also strategically shifting its revenue model toward fee-based earnings, reducing exposure to commodity price swings while maintaining steady cash flow.
During its Q4 2024 earnings call, ONEOK executives outlined the company’s growth strategy in the Permian and beyond, touching on increased production, NGL and crude infrastructure investments, and rising global demand for LNG, LPG, and NGL exports. Here’s a closer look at how ONEOK is capitalizing on these opportunities.
1. Rising Production in the Permian Basin
The Permian Basin continues to see strong production growth, with increasing volumes of crude oil, natural gas, and NGLs. ONEOK is expanding its footprint to capture higher gathering, processing, and transportation volumes across its NGL, natural gas, and crude oil segments.
✅ Natural Gas & NGL Growth
- ONEOK expects natural gas processing volumes in the Permian to reach ~1.6 Bcf/d in 2025.
- Higher ethane recovery rates are boosting NGL volumes, particularly with more efficient well completions and longer laterals.
✅ Crude Oil Growth
- ONEOK has integrated Medallion and EnLink crude gathering systems, allowing it to move more crude through pipelines instead of trucking.
- Lower transportation costs and higher throughput are expected to increase pipeline margins and optimize operations.
Sheridan Swords, EVP, on producer activity:
“We are seeing increasing efficiencies in the Permian, with longer laterals and better well performance driving more gas and NGL volumes. This is directly benefiting our midstream operations.”
2. Midstream & Pipeline Investments in the Permian
To support rising production, ONEOK is investing in midstream and pipeline infrastructure to ensure it can transport, store, and process higher volumes efficiently.
Major Midstream Investments
- ONEOK is relocating a 150 MMcf/d gas processing plant from North Texas to the Permian Basin, providing a capital-efficient way to meet demand growth.
- Crude gathering and pipeline capacity is being expanded, integrating Medallion and EnLink assets to improve efficiency.
- Optimizing NGL infrastructure to ensure higher throughput and better logistics across its pipeline network.
Sheridan Swords on midstream expansion:
“Rather than building new infrastructure from scratch, we are focusing on capital-efficient ways to expand, including relocating assets and optimizing our gathering systems.”
Pipeline Expansion & Investment
ONEOK is enhancing its pipeline network to support rising production and export demand, ensuring it can move more natural gas, NGLs, and crude oil across key U.S. and international markets.
✅ West Texas NGL Pipeline Expansion
- Increasing capacity to 740,000 barrels per day (bpd) to move growing NGL production from the Permian Basin.
- Ensures better connectivity to Mont Belvieu storage and export hubs.
✅ Crude Pipeline Optimization
- EnLink and Medallion crude assets have been integrated, allowing ONEOK to reduce crude trucking costs and increase pipeline throughput.
- The company is maximizing crude volumes on long-haul pipelines by utilizing its expanding crude marketing business.
✅ Natural Gas Pipelines for LNG Demand
- ONEOK’s pipeline network in Texas, Oklahoma, and Louisiana is positioned to support rising LNG export growth.
- The company expects U.S. LNG export capacity to nearly double by 2028, creating higher demand for pipeline transportation services.
Walter Hulse, CFO, on pipeline growth:
“We are executing capital-efficient expansions in our pipeline network, ensuring we maximize capacity without overbuilding.”
3. Rising Demand for LNG, LPG, and NGL Exports
ONEOK is making major investments in exports, recognizing that global demand for U.S. energy products continues to rise.
LPG Export Expansion: Texas City Terminal
- ONEOK is building a 400,000 bpd LPG export terminal in Texas City, TX, through a joint venture with MPLX.
- The terminal will connect directly to ONEOK’s Mont Belvieu storage, ensuring a seamless wellhead-to-water strategy.
- The project is expandable beyond 400,000 bpd, allowing ONEOK to capture future LPG demand growth.
Sheridan Swords on LPG export strategy:
“With our new Texas City terminal, we can capture more LPG export volumes directly instead of relying on third-party docks, improving margins and market flexibility.”
Growing LNG & Natural Gas Demand
- The U.S. is expected to expand LNG export capacity to ~30 Bcf/d by 2028, creating higher demand for natural gas transportation and storage.
- ONEOK’s pipeline and storage network in Texas, Oklahoma, and Louisiana is positioned to benefit from LNG-driven demand growth.
Pierce Norton, CEO, on LNG expansion:
“With growing demand for LNG, natural gas pipelines will remain critical, and we are well-positioned to support this global energy transition.”
4. ONEOK’s Focus on Fee-Based Revenue
As part of its long-term financial strategy, ONEOK is shifting more revenue to fee-based contracts, ensuring greater earnings stability.
Why Fee-Based Revenue Matters
- Reduces exposure to commodity price volatility.
- Provides predictable cash flow through long-term contracts.
- Strengthens credit metrics and financial flexibility.
Fee-Based Growth Strategy
✅ NGL Pipelines & Fractionation – Operate mostly under take-or-pay agreements, providing steady revenue.
✅ Crude Gathering & Pipelines – Fee-based contracts ensure stable earnings from transportation volumes.
✅ Natural Gas Pipelines & Storage – Firm transportation agreements support long-term demand.
Walter Hulse, CFO, on fee-based revenue:
“Our long-term strategy remains focused on growing fee-based revenue, which provides resilience and predictable cash flows regardless of commodity price fluctuations.”
Conclusion: ONEOK’s Permian Growth Strategy is Driving Long-Term Success
ONEOK is investing heavily in the Permian Basin, expanding midstream, pipeline, and export infrastructure to capture rising production and growing international demand.
✅ Higher production in the Permian is fueling NGL, crude, and natural gas volume growth.
✅ Midstream and pipeline investments are enhancing ONEOK’s ability to transport and process more product.
✅ LNG, LPG, and NGL exports are a key part of the company’s long-term strategy.
✅ Fee-based revenue growth is ensuring financial stability and reducing commodity risk.
As global energy demand rises, ONEOK’s expanding infrastructure and export capabilities will continue to position the company as a leader in the U.S. midstream sector.
