8-K: ONEOK and MPLX Partner to Construct New LPG Export Terminal and Pipeline in Texas

ONEOK and MPLX are forming joint ventures to build a large-scale LPG export terminal and associated pipeline in Texas, expanding their NGL value chain.

Summary

• ONEOK and MPLX have entered into definitive agreements to form joint ventures for a new LPG export terminal and pipeline.
• The export terminal, named Texas City Logistics LLC (TCX), will be located in Texas City, Texas, and have a capacity of 400,000 barrels per day.
• ONEOK and MPLX will each own 50% of TCX, with MPLX responsible for construction and operation.
• The total investment in the export terminal is expected to be $1.4 billion, with each company contributing approximately $700 million.
• The terminal is expected to be completed in early 2028.
• The pipeline joint venture, MBTC Pipeline LLC, will connect ONEOK's Mont Belvieu storage facility to the new terminal.
• ONEOK will own 80% of the pipeline joint venture, and MPLX will own 20%.
• ONEOK will construct and operate the pipeline.
• The total investment in the pipeline is expected to be $350 million, with ONEOK contributing approximately $280 million and MPLX contributing $70 million.
• ONEOK's total share of capital investment for both projects is expected to be approximately $1.0 billion.

Sentiment

Score: 8

Explanation: The announcement is positive, detailing a strategic partnership and investment in a growing market. The project is expected to enhance ONEOK's value chain and provide long-term growth opportunities.

Positives

• The joint ventures expand and extend ONEOK's NGL value chain.
• The projects provide additional optionality and value to ONEOK's customers.
• The export terminal will leverage Marathon's existing location and infrastructure, providing construction timing and cost benefits.
• The projects align with ONEOK's disciplined capital allocation strategy.
• The projects are strategically located to capitalize on future growth and demand for energy infrastructure, including export capacity.

Risks

• The announcement contains forward-looking statements that are subject to known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially.
• ONEOK may be unable to achieve the anticipated benefits of the transaction.

Future Outlook

The projects are expected to expand and extend ONEOK's NGL value chain, providing additional optionality and value to its customers. ONEOK expects future growth and demand for more energy infrastructure, including export capacity.

Management Comments

• We are excited to collaborate with MPLX on these strategically located projects which expand and extend our NGL value chain providing additional optionality and value to our customers, said Pierce H. Norton II, ONEOK president and chief executive officer.
• Given our high expectations for future growth and demand for more energy infrastructure, including export capacity, these projects with MPLX complement our disciplined capital allocation strategy.

Industry Context

The announcement reflects the ongoing trend of increasing demand for LPG export capacity on the U.S. Gulf Coast. Companies are investing in infrastructure to capitalize on growing international demand for NGLs.

Comparison to Industry Standards

• The 400,000 bpd export terminal is a large-scale project, comparable to other major LPG export terminals on the U.S. Gulf Coast.
• Companies like Enterprise Products Partners and Targa Resources also operate significant LPG export facilities in the region.
• The joint venture structure is a common approach for large infrastructure projects in the midstream sector, allowing companies to share risks and expertise.

Stakeholder Impact

• Shareholders: The projects are expected to create long-term value and growth opportunities.
• Customers: The projects will provide additional optionality and value to customers.
• Employees: The projects may create new job opportunities during construction and operation.

Key Dates