Oneok Partners (OKS) isn’t a producer of crude oil or natural gas. However, the firm is equally important to the future of the Bakken.
One of the biggest issues facing producers in the Bakken shale is the lack of sufficient pipeline infrastructure to get their energy to end-users. The prolific field is also producing a record 9.7 billion cubic feet of natural gas per day. In fact, producers are forced to “flare” or burn roughly 30% of that gas because there simply isn’t enough infrastructure in the region to capture and use all of that fuel.
That’s where the pipeline firm comes in. Oneok is undergoing a massive build-out in the region to increase capacity for natural gas transmission.
The master limited partnership already has the most exposure to Bakken natural gas liquids processing capacity, but still plans to invest $2.5 billion through 2015 for Williston basin projects. Those projects will increase its processing capacity to 610 MMcfd to help reduce the flaring problem. Likewise, a new pipeline is in the planning stages, designed to move crude oil from the Bakken to the storage depots in Cushing, Okla.
Overall, Oneok — and its 5.5% dividend yield — make it the best way to play the needed infrastructure in the Bakken.
As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.