* Pipeline to run from Williston Basin to Cushing
* 200,000 bpd capacity could be expanded
* Line to cost up to $1.8 billion, to be completed by 2015
By Janet McGurty
NEW YORK, April 9 Oneok Partners LP
plans to build a 200,000 barrel-per-day (bpd) pipeline to
deliver crude from North Dakota's rapidly expanding Bakken
region to the Cushing, Oklahoma, oil market hub, its first foray
into crude transportation.
The natural gas storage and transport company plans to
invest $1.5 billion to $1.8 billion to build the 1,300 mile
Bakken Crude Express Pipeline, which will be completed by 2015
and carry high quality light-sweet crude oil produced from tight
oil deposits in North Dakota's Williston Basin, the company said
in a statement on Monday.
Crude oil production from Bakken and other shale oil
formations in the United States has surged over the past two
years, redefining crude markets and creating a scramble to build
infrastructure to get supplies to refining hubs, especially the
U.S. Gulf Coast.
The Bakken Crude Express Pipeline will run parallel to a
natural gas liquids pipeline already under construction that
will run from the Williston Basin in Montana to Colorado. The
oil line will then run next to the Overland Pass Pipeline, in
which Oneok has a 50 percent interest, from Colorado to
"This proposed pipeline will provide producers with
efficient and reliable transportation of their product directly
to one of the largest crude-oil market hubs in the U.S.," said
Terry K. Spencer, ONEOK Partners president, in the statement.
"Many of the supply commitments under negotiation are with
the same producers in the Williston Basin that we currently
Oneok said capacity on the new oil pipeline could be
increased based on the supply commitments prior to construction.
A spokeswoman for the company said that it has yet to announce
the open season to gauge the interest of shippers using the line
and that Oneok did not anticipate any right of way issues since
the proposed crude line will trace the route of existing or
The North Dakota shale growth, along with rising flows of
oil from Canada to the Midwest, has created a boom for companies
seeking ways to move crude from production regions to the U.S.
Gulf Coast, home to roughly half of U.S. refining capacity.
Analysts have said that unless new capacity to ship oil produced
from the regions is constructed, it could create a supply
bottleneck, weighing on prices.
Companies are racing to build capacity to move crude from
Cushing, the delivery point for the New York Mercantile
Exchange's oil futures contract, to the Gulf Coast to help
alleviate a glut of crude building up in the Midwest.
A reversal of Enterprise Products Partners Seaway
pipeline to take crude from Cushing to the coast at the end of
May is the first major step toward alleviating the Midwest glut.
Crude sold into the Gulf Coast fetches a hefty premium to oil
sold at Cushing.
North Dakota's oil output in January surged to 546,000 bpd,
up nearly 60 percent from the previous year, pushing it ahead of
California to become the third-largest oil producing state
behind Texas and Alaska.
Last week, Oneok announced plans to build a pipeline in
North Dakota to carry natural gas produced in the Bakken to a
gathering network in Williams county as part of efforts to
monetize gas produced from oil wells instead of just flaring it.