ONEOK ("one oak") is OK with its singled-minded pursuit of profits from natural gas activities. Through its 41%-owned ONEOK Partners (of which it is the general partner) it operates 18,300 miles of gas-gathering pipeline and 7,600 miles of transportation pipeline, as well as gas processing plants and storage facilities. The unit also owns one of the US's top natural gas liquids (NGL) systems. ONEOK's energy services unit focuses on marketing natural gas across the US. To focus on its core pipeline businesses, in 2014 ONEOK spun off its regulated utilities (Oklahoma Natural Gas, Kansas Gas Service, and Texas Gas Service, which distribute natural gas to more than 2.1 million customers) as ONE Gas.
ONEOK has 11,300 miles of natural gas gathering pipelines in the Mid-Continent and 7,000 miles in the Rocky Mountains. Its largest distribution markets are Austin and El Paso, Texas; Kansas City, Wichita, and Topeka, Kansas; and Oklahoma City and Tulsa, Oklahoma. It is the largest natural gas distributor in Kansas and Oklahoma, and the third largest in Texas.
Its energy services segment markets natural gas to wholesale customers. ONEOK also has a parking garage and leases office space in Tulsa.
ONEOK's natural gas distribution segment (now ONE Gas) is made up of the company's regulated public utilities.
Kansas Gas Service, largest natural gas distribution company in Kansas, delivers natural gas service to more than 630,000 customers in 342 communities. Oklahoma Natural Gas, the #1 natural gas distributor in Oklahoma, serves 829,000 customers. Texas Gas Service, the third largest natural gas distribution company in that state, serves 603,000 customers.
After experiencing a revenue drop in f2012 due to lower natural gas and NGL product prices, in 2013 ONEOK's revenues increased by 16% due to higher natural gas and NGL volumes gathered, processed, and sold from ONEOK Partners’ completed capital projects, partially offset by lower net realized natural gas and NGL product prices, and ethane rejection in ONEOK Partners’ business. The growth in natural gas supply from North American shale basins has contributed to lower NGL product prices and narrower NGL product price differentials, and narrower natural gas location and seasonal price differentialsin the markets ONEOK Partners serves. Natural Gas Distribution segment benefited from new rates and higher sales volumes, primarily due to colder than normal weather in all three states where it operates.
In 2013 ONEOK's net income declined by 26% due to higher operating costs and a decrease in income from continuing operations.
The company’s operating cash inflow increased to $1.29 billion in 2013 (from $984 million in 2012) as the result of a change in current assets and liabilities due to cash generated from the account payables and energy marketing and risk management assets and liabilities.
ONEOK's strategy is to deliver consistent growth and sustainable earnings by both internal investments and strategic acquisitions.
The company's primary growth vehicle, ONEOK Partners, committed $3 billion to growth projects between 2011 and 2014, primarily in the high-yielding NGL market. It is investing heavily in that unit's growth projects in the Williston Basin (Bakken Shale) in North Dakota and the Cana-Woodford Shale and Granite Wash areas in Oklahoma and Texas.
In 2013 ONEOK completed three projects that are part of its $4.7 billion to $5.3 billion growth program through 2015, including:
The Bakken NGL Pipeline that transports unfractionated NGLs from the Bakken Shale and Three Forks formations in the Williston Basin to the partnership's 50%-owned Overland Pass Pipeline, a 760-mile NGL pipeline extending from southern Wyoming to Conway, Kansas.;
In a major reorganization, in 2013 ONEOK announced plans to spin off its natural gas distribution business, resulting in two independent, highly focused energy companies. The new public company, ONE Gas, Inc., will consist of Oklahoma Natural Gas Company, Kansas Gas Service and Texas Gas Service. ONEOK will continue to hold interests in ONEOK Partners.
As part of the restructuring, that year ONEOK also announced plans to wind down its energy services segment. The company's ONEOK Partners segment will continue to market natural gas, natural gas liquids, and condensate as a service to its producers and customers.
Mergers and Acquisitions
In 2014 it acquired NGL pipelines and related assets from affiliates of Chevron for $800 million. As a result ONEOK Partners now owns 80% of the West Texas LPG Pipeline Limited Partnership (and 100% of Mesquite Pipeline), which collectively consist of 2,600 miles of NGL gathering pipelines extending from the Permian Basin in southeastern New Mexico to East Texas and Mont Belvieu, Texas. ONEOK Partners is the operator of both pipelines.
In 2013 the company announced plans to invest $440 million in the natural gas liquids-rich area in the Powder River Basin in Wyoming to by a 50-million cubic feet per day natural gas processing facility in Wyoming (the Sage Creek plant and related infrastructure) for $305 million. It plans to invest $135 million to upgrade and construct natural gas gathering and processing related infrastructure, NGL gathering pipelines and well connections.