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Bakken gas output long-lived as gas-to-oil ratios strengthen, overall production climbs: Oneok executives


Gas-to-oil ratio rose from 1.46 to 2.71 in seven years

Considering expansion of Elk Creek NGLs pipeline

  • Author
  • Killian Staines
  • Editor
  • Richard Rubin
  • Commodity
  • Crude Oil Natural Gas NGLs Refined Products Oil & Gas

Rising natural gas-to-oil ratios will continue to support gas production in the US' Bakken Shale, Oneok executives said.

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Oneok's acquisition of Magellan Midstream gives it a wider footprint outside of the Bakken, but executives said during a Nov. 15 investor presentation that they still see room for growth in their gas gathering and processing business there.

"We love the Bakken; it has been very good to us and will continue to be good for us for a long, long time," CFO Walt Hulse said.

Bakken gas production averaged a record 2.6 Bcf/d in July and has been around 2.4 Bcf/d since September, data from S&P Global Commodity Insights shows.

In the wider Williston Basin, production has risen to 3.3 Bcf/d in 2023, from 1.1 Bcf/d in 2014, even with stagnant oil production, Oneok said in its presentation slides. This has been driven by an increase in the gas-oil ratio to 2.71 as of August, from 1.46 in 2016, the company said.

"On the gas side where people have missed it and even the producers have missed it is on the GOR," said Sheridan Swords, executive vice president.

"We continue to see a long life of growth on the gas side in the Bakken," Swords said. "We're not going to see the growth we've seen in the past, but we're not going to see it decline for a long period of time." Even if crude production stays flat, gas production will grow thanks to the rising GOR, Swords said. "And right now, we're growing crude production, so it would even be more than that."

The Bakken's gas growth should also increase opportunities in processing and in natural gas liquids, especially considering the rich nature of the gas, with its GPM (gallon per Mcf) ratios of 10-12, Swords said.

Oneok is taking steps toward expanding the Elk Creek NGLs pipeline to 400,000 b/d from 240,000 b/d currently. The executives said the company would wait to see when the capacity is needed.

"We can stop it if we want to, but I don't see that happening as we continue to see volume grow coming out of that basin right now," Swords said. For now, the company is focusing on long-lead time items, he said. "We're spending money today to put us in a position to expand Elk Creek as quick as we can," Swords said.

Batching on pipelines

The Magellan acquisition will allow Oneok to increase NGLs and refined products volumes transported by batching NGLs on refined products pipelines, and refined products on purity NGL lines.

"If you're moving gasoline, we can just stop the gasoline batch, put a batch of normal butane in there and keep moving," Swords said. "And where those two intersect a little bit, you're putting butane into gasoline, which is allowed... so all of a sudden, we have expanded our whole network."