ONEOK settles Medford facility insurance claim, plans Belvieu fractionator

ONEOK Inc. reached an agreement with its insurers to settle claims for physical damage and business interruption related to a July 2022 incident at its facility in Medford, Oklahoma. A fire reportedly idled the facility.

ONEOK agreed to resolve its claim for total insurance payments of $930 million. It also announced plans to construct a new 125,000-barrel per day (bpd) natural gas liquids (NGL) fractionator at its Mont Belvieu, Texas, facility. The new fractionator, MB-6, will increase ONEOK’s total fractionation capacity in Mont Belvieu to about 700,000 bpd and better align ONEOK’s fractionation capacity with NGL market demand in the Gulf Coast, the company says.

Additionally, the MB-6 fractionator will produce purity ethane instead of an ethane/propane (E/P) mix previously produced at the Medford facility. The new 125,000 bpd MB-6 fractionator would be equivalent to about 185,000 bpd of capacity at the Medford facility.

The demand for E/P mix has decreased, ONEOK says, while the demand for purity ethane has increased in the Gulf Coast. The company would transport much of the Medford E/P mix south and split it into purity ethane and propane, consuming capacity at ONEOK’s existing Mont Belvieu facilities. ONEOK’s E/P mix output from the remaining midcontinent fractionation facilities at Bushton, Hutchinson and Conway, Kansas, is expected to be enough to meet market demand.

Construction of MB-6 is expected to take about 24 months and cost about $550 million, according to ONEOK. It says the project has a more favorable completion schedule when compared with rebuilding at Medford.

ONEOK is also currently constructing its MB-5 fractionator, at a capacity of 125,000 bpd, scheduled for completion in the second quarter of this year.

“We are pleased to have come to a successful agreement with our insurance carriers that was the result of a collaborative process,” says Pierce H. Norton II, ONEOK president and CEO. “This agreement provides us the certainty of insurance recovery and shortens the construction period to restore the most efficient fractionation capacity to our integrated system to meet expected growth in NGL supply for petrochemical and export demand.”

ONEOK says it will continue to operate NGL pipeline assets in Medford along with existing offices for regional operations. In addition, the company is preserving assets for future potential NGL facilities that could be constructed in Medford to enhance its NGL business as the market evolves.

ONEOK Inc. is a midstream service provider whose NGL system connects supply in the Rocky Mountain, midcontinent and Permian regions with key market centers. It also has an extensive network of natural gas gathering, processing, storage and transportation assets.

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