Oneok resolves Medford NGL Facility insurance claim for $930M

ONEOK announced that it has reached an agreement with its insurers to settle all claims for physical damage and business interruption related to the Medford incident that occurred in July 2022.Under the terms of the settlement agreement, ONEOK agreed to resolve its claim for total insurance payments of $930M, including $100M received to date. The outstanding settlement payment is required to be paid by the insurers within 45 days. The proceeds will serve as settlement for property damage and as a payment in lieu of future business interruption insurance claims. With the insurance claim now resolved, the company is also announcing plans to construct a new 125,000-barrel per day NGL fractionator at its Mont Belvieu, Texas, facility. Upon completion, the new fractionator, MB-6, will increase the company’s total fractionation capacity in Mont Belvieu to approximately 700,000 bpd and better align ONEOK’s fractionation capacity with NGL market demand in the Gulf Coast. Additionally, the MB-6 fractionator will produce purity ethane instead of an ethane/propane mix previously produced at the Medford facility. The new 125,000 bpd MB-6 fractionator would be equivalent to approximately 185,000 bpd of capacity at the Medford facility. The demand for E/P mix has decreased while the demand for purity ethane has increased in the Gulf Coast, causing much of the Medford E/P mix to be transported south and split into purity ethane and propane consuming capacity at ONEOK’s existing Mont Belvieu facilities. ONEOK’s E/P mix output from the remaining Mid-Continent fractionation facilities at Bushton, Hutchinson and Conway is expected to be enough to meet market demand. Construction of MB-6 is expected to be completed in approximately 24 months at a total cost of approximately $550M and has a more favorable completion schedule when compared with rebuilding at Medford.