About 10 days after Tulsa’s ONEOK cut its pipeline operations by $500 million, more companies are doing the same in the Permian Basin.
ONEOK’s budget cut, combined with others totals an estimated $1.9 billion. This week,Houston offshore oil company Talos Energy also pledged to cut $170 million from its budget.
Noble Midstream Partners, Rattler Midstream, Targa Resources, EnLink Midstream, Oneok and Pembina Pipeline made the budget cuts over the past two weeks — representing an overall 30 percent cut in planned capital expenditures for new pipeline and storage projects in 2020, according to a report from Houston energy investment banking firm Simmons Energy.
Canadian pipeline operator Pembina made the largest cut of the six companies, slashing nearly $700 million, or 43 percent, from its nearly $1.6 billion budget. The company now plans to spend nearly $900 million this year.
Houston oilfield service company NexTier Oilfield Solutions is cutting its budget by more than half as work continues to evaporate amid record low crude prices.
In a Monday afternoon statement, NexTier announced that the company is cutting up to $110 million from its capital expenditure budget. The hydraulic fracturing company originally planned to spend $210 million this year but now believes it will spend between $100 and $120 million.
The company plans to idle more of its hydraulic fracturing fleet while reduce investments on innovation and new technology in order to focus projects that directly reduce capital expenditures or operating costs.
Midland exploration and production company Diamondback Energy is cutting its 2020 drilling budget for a second time this month as crude oil continue to fall to nearly 20-year lows.
In a statement issued late last week, Diamondback has cut $1.2 billion from hits capital budget, meaning that the company now plans to spend between $1.5 billion and $1.9 billion on drilling and completing new wells this — and plans to cut more, if oil prices continue to fall. Diamondback made the announcement at a time when many exploration and production companies are cutting their drilling budgets in response to rapidly falling oil prices.
It was March 11 when ONEOK announced a decrease of $500 million from its 2020 growth capital guidance because of the plunging oil prices. The move leaves a budget in the range of $1.60 billion to $2.40 billion with a midpoint of $2.0 billion.
“Given the significant inventory of flared natural gas in the Williston Basin and fully contracted growth in the Permian Basin, and factoring in the current commodity price environment and assumed rig reductions, we expect our 2020 results to be within our previously announced guidance ranges,” said Terry K. Spencer, ONEOK president and chief executive officer in making the original announcement. “We are working with our producers on any updates to their drilling plans and evaluating the impact on our future volume expectations, and we will make adjustments to financial guidance if appropriate.”
As a result, ONEOK suspended its expansion of the West Texas LPG pipeline in the Permian Basin. The company had originally planned to expand the pipeline by 100,000 barrels a day.
It also suspended a 200 million cubic feet a day expansion of its Demicks Lake natural gas processing facility in North Dakota’s Williston Basin. The scope of its Elk Creek Pipeline expansion was reduced as well. The 900-mile line was constructed to carry unfractionated natural gas liquids from the company’s Riverview terminal in eastern Montana to existing Mid-Continent NGL operations in Bushton, Kansas.
The Elk Creek Pipeline is being constructed to transport unfractionated natural gas liquids (NGLs) from near ONEOK’s Riverview terminal in eastern Montana to its existing Mid-Continent NGL facilities in Bushton, Kansas.