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ONEOK to Present at Bank of America Conference

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  • 1. Bank of America Conference Key Biscayne, Florida | November 14, 2008
  • 2. John W Gibson W. ONEOK, Inc. | Chief Executive Officer 2
  • 3. Forward- Forward-Looking Statement Statements contained in this presentation that include company p py expectations or predictions should be considered forward-looking statements which are covered by the safe harbor provisions of the Securities Act of 1933 and the Securities and Exchange Act of 1934 1934. It is important to note that the actual results of company earnings could differ materially from those projected in such forward-looking statements. For additional information, refer to ONEOK’s and ONEOK Partners’ Securities and Exchange Commission Filings. 3
  • 4. Agenda Overview & Vision Diversified Assets Financial Highlights 4
  • 5. Overview & Vision 5
  • 6. ONEOK Today A Premier Energy Company • Assets that fit and work • Demonstrated financial together flexibility and discipline – Integrated operations – Expanding participation in the value chain • Proven ability to grow profitably – Predominately fee-based income – Executing $2 billion of growth projects at ONEOK Partners ONEOK Distribution ONEOK Energy Services Leased Pipeline Capacity Leased Storage Capacity ONEOK Partners Growth Projects 6
  • 7. Our Vision A Premier Energy Company A premier energy company creating exceptional value for all p gy py g p stakeholders by: • Rebundling services across the value chain, primarily through verticall integration, t provide customers with premium services ti i t ti to id t ith i i at lower costs • Applying our capabilities — as a gatherer, processor, transporter, marketer and distributor — to natural gas and natural gas liquids… …and other commodities 7
  • 8. A Journey By Design Rebundling the Value Chain and Applying Our Capabilities Markets Midstream Exploration & Distribution Marketing Midstream Natural Gas Production NGLs • Serve 2 million • Gathering • Gathering • Leading customers in • Fractionation • Processing marketer of Oklahoma, • Pipelines • Pipelines natural gas Kansas & Texas • Storage • Storage 8
  • 9. Our Key Strategies A Premier Energy Company • Generate consistent growth and sustainable earnings g g – Develop and execute internally generated growth projects at ONEOK Partners – Improve profitability of ONEOK Distribution Companies – Continue focus on physical activities at ONEOK Energy Services • Execute strategic acquisitions that p g q provide long-term value g • Manage our balance sheet and maintain strong credit ratings at or above current level • Operate in a safe and environmentally responsible manner • Attract, develop and retain employees to support strategy p py pp gy execution 9
  • 10. Diversified Assets Distribution Energy Services ONEOK Partners 10
  • 11. Distribution Sixth Largest Natural Gas Distributor in U.S. • Growth – Efficient investments – Customers, volumes, rate base • Earnings stabilization g – Synchronized rates and regulatory actions – Innovative rate design and mechanisms – Operations and maintenance cost control • Cost control – Standardization – Continuous process improvement p p – Utilize technology • Serve more than two million customers Revenues $2.1 billion in Oklahoma, Kansas and Texas , Asset Base $2.7 billion Rate Base $1.7 billion 11
  • 12. Distribution Established a New Level of Performance Through Strategy Execution • Closing the gap between actual • Increased level of sustainable and allowed returns earnings – $70 million operating income gap • Rate mechanisms reduce in 2005 regulatory lag – Reduced to $20 million in 2008 Return on Equity* Operating Income 10.2% $186 $174 $ in Millions 8.8% 8.5% $117 $114 5.3% 4.9% 4 9% 13% CAGR 80% Increase 2005 2007 2008 2006 2005 2006 2007 2008 2008 Guidance Guidance Allowed * ROE calculations are consistent with utility ratemaking in each jurisdiction and not consistent with GAAP returns 12
  • 13. Energy Services Strategic Leased Assets Enhance Our Ability to Provide Premium Services to Customers • Deliver natural gas, together with bundled, reliable, premium p p products and services – Peaking services – Primarily to LDCs y • Access to prolific supply and high-demand areas Leased Pipeline Leased Storage • Industry knowledge and Storage 91 Bcf of capacity 2.2 Bcf/d of withdrawal rights customer relationships 1.4 Bcf/d of injection rights Transportation 1.5 Bcf/d of long-term firm capacity Sales 3.3 Bcf/d in 2007 3.1 Bcf/d in 2006 13
  • 14. Energy Services Key Drivers • $830 million of operating income in five years • Seasonal storage and transportation differentials have the greatest impact $5.00 $250 $229 $205 Operating Income (Millions) $4.00 $200 $ $166 $139 $3.00 $150 $/MMBtu $93 $2.00 $100 $1.00 $50 $- $0 2004 2005 2006 2007 2008 Guidance Realized Storage Differential Rockies to Mid-Continent Differential Operating Income 14
  • 15. ONEOK Partners Primary Growth Engine for ONEOK ONEOK: General Partner and 47.7 percent owner • Strategic assets connected to prolific supply basins with access to key markets • Provide non-discretionary services to producers • Predominantly fee-based income generates stable cash flows • Natural Gas Natural Gas Liquids Gathering & Fractionation Pipelines Gathering & Processing Pipelines – Connected to over 90 percent of the Mid- —Diversified supply basins, producers and Continent region’s processing plants region s contracts mitigate earnings volatility – Allows us to provide full range of services —Earnings on pipelines are predominantly to our customers fee based 15
  • 16. ONEOK Partners - Roadmap to Growth $2 Billion of Internal Growth Projects by 2009 Grasslands plant expansion $40-$45 million Guardian II Expansion Fort Union Gas $277-$305 million Gathering Expansion ( (37% owner) NGL & Refined Product D-J Lateral System Acquisition $70-$80 million Overland Pass $300 million Pipeline $575-$590 million Piceance Lateral $110-$140 million NGL Upgrade Projects Midwestern $230-$240 million Extension $69 million Woodford Extension $36 million Natural Gas Gathering & Processing 2010 -2015 Internal Growth Projects: Arbuckle Natural Gas Pipelines $300-500 million/year Pipeline Natural Gas Liquids Gathering & Fractionation $340-$360 million Natural Gas Liquids Pipelines plus acquisitions l i iti Growth Projects 16
  • 17. ONEOK Partners Creating Exceptional Value for Unitholders • ONEOK as sole general g partner Distributions Paid Per Unit – 11 consecutive distribution $1.08 $1.06 increases $1.04 $1.025 $1.01 $1 01 • Continued opportunities $1.00 $0.98 $0.99 $0.97 $0.95 for distribution growth – Growth EBITDA generated 11% CAGR $0.88 is primarily fee based $0.80 • Aligned interests – Quarterly distributions on ONEOK’s general partner 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 interest have more than doubled 17
  • 18. Aligned Interests Increasing Our Investment in ONEOK Partners • Purchased 5.4 million OKS • As ONEOK Partners grows, common units in March 2008 for ONEOK grows $303 million – EBITDA growth: Two-thirds of every incremental dollar flows to – Contributed $9.6 million to ONEOK maintain 2 percent general partner interest – Distribution growth: Penny a quarter adds $5.2 million to – Increased ownership to 47.7 ONEOK’s annual cash flow percent IDR and Capital EBITDA Higher Net Equity Dividends Projects Growth Distributions Income Income Unit Price Appreciation Share Price Appreciation 18
  • 19. Financial Highlights 19
  • 20. Stable Cash Flow Financial Flexibility • Continued strong free-cash flow Free Cash Flow available for: $ in Millions Acquisitions – $183 $159 Investment in OKS $170 – $182 $205 Share repurchase – $89 $110 Dividend increases – $163 $150 $135 Debt repayment – •RRepurchased $884 million of hd illi f $264 $250 shares since 2005 $182 $175 $174 • Paid $402 million of maturing long-term long term debt in February 2008 2004 2005 2006 2007 2008 Guidance • Invested $313 million in ONEOK Capital Expenditures Dividends Surplus Partners in March 2008 *Stand-alone cash flow, excluding acquisitions 20
  • 21. Strong Balance Sheet Demonstrated Financial Discipline • Capital structure • Strong credit rating p g g – Goal: 50/50 capitalization – S&P: BBB – Moody’s: Baa2 • Liquidity at October 31, 2008 –$$335 million cash and cash equivalents – $115 million available under Total Equity Debt existing $ billion facilities $1.6 44% 56% – $915 million of natural gas in storage Stand–alone Capitalization September 30, 2008 21
  • 22. Shareholder Value Delivering Consistent Growth and Stable Earnings Dividend Growth Shareholder Return • Total return of 84 percent since 2004 • 10 dividend increases in five years • Share price increase of 53 percent • Target: 50-55 percent of recurring since 2004 earnings Share Price Total Return $0.40 $50 180% 0.38 $47.40 6 $0.36 160% $0 $0.34 $44.63 $45.00 $0.32 $40 140% $0.30 $0.28 120% $34.40 $37.79 $0.25 $30 $34.02 $0.23 $30.82 100% $0.21 $32.25 16% CAGR $0.19 84% $26.02 80% $22.55 $22 $20 $ 60% 40% $10 20% S&P 500 ONEOK, Inc. 0% $0 Q1 2004 Q1 2005 Q1 2006 Q1 2007 Q1 2008 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 Dividends Per Share Total Shareholder Return *Share prices are closing prices at last day of quarter 22
  • 23. Key Investment Considerations A Premier Energy Company • Strong track record of creating value for both customers and g g investors, through rebundling services across the value chain and applying our capabilities to other commodities • St t i assets connecting prolific supply b i and k markets Strategic t ti lifi l basins d key kt • Significant growth potential through continued strategy execution • Demonstrated financial discipline • Experienced and proven management team • Talented workforce dedicated to providing safe and reliable p g service to all our customers 23
  • 24. Questions & Answers 24
  • 25. Appendix ONEOK 26
  • 26. Earnings Growth Delivering Consistent Growth and Stable Earnings • Di Diverse asset b base Stand-alone Operating Income provides significant fee- Plus Equity Earnings based income and $617 $591 $341 $535 stable earnings $524 $444 • Strategy execution ONEOK Partners results res lts in significant 7% CAGR earnings growth Distribution $186 Energy $93 Services 2004 2005 2006 2007 2008G *Millions of dollars, excluding gain/loss on sale of assets Millions 27
  • 27. Aligned Interests Growth at ONEOK Partners Benefits ONEOK $22.7 General Partner Distributions • Quarterly distributions to Q y $20.9 $19.1 ONEOK have increased in the $16.2 $14.9 $13.3 $14.1 $11.6 $12.4 $ in Millions past two years: $10.0 – General partner interest 39% CAGR distributions have more than doubled 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 – Limited partner interest Limited Partner Distributions $45.8 distributions have increased more $44.1 $44.9 than $10 million $36.6 $37.0 $37.4 $37.9 $35.1 $35.9 $36.3 • It Internally generated growth ll td th ns $ in Million projects will result in additional 11% CAGR growth 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 28
  • 28. Business Segments Diversity Provides Stability & Opportunity • ONEOK Partners – ONEOK’s primary growth engine • Distribution – Provides low-risk, stable cash flow – Rate strategies have led to an increase in sustainable earnings and an improved return on equity • Energy Services – Combined supply, transportation and storage contracts provide premium service to customers – Positions us to capture upside in the market 29
  • 29. Distribution Sixth Largest Natural Gas Distributor in U.S. • Largest natural g distributor in g gas Oklahoma and Kansas; third largest in Texas •SServe more th t million customers than two illi t Oklahoma Natural Gas Kansas Gas Service Texas Gas Service Coldest territory with weather Highest potential growth Largest customer base normalization & bad debt recovery $19.8 million 2008 Rate $5.2 million 2008 Rate $2.9 million 2008 Rate Filings Filings Filings Customer Base Approximately Customer Base Approximately 85% Customer Base Approximately 70% 600,000 customers residential load residential load $675 million $ Rate Base $710 million Rate Base $302 million Rate Base 30
  • 30. Distribution Successful Execution of Rate Strategy 2005 2008 Opportunities Rate Mechanism Solution Oklahoma Kansas Texas * Oklahoma Kansas Texas * 36% 50% Earnings Lag Capital Recovery Bad Debt Recovery 46% FILED Margin Increased Increased Increased Customer Charge Protection Weather Normalization 46% 61% Incentive Rates Revenue Sharing FILED * Percent of customers within the 17 Texas jurisdictions 31
  • 31. Energy Services What We Do • Contract for natural gas supply from diverse sources g pp y • Lease and optimize storage and transportation capacity • Provide bundled, reliable products and services to natural gas and electric utilities • During periods of market inefficiencies, effectively use storage and transportation assets to capture incremental margins Supply Markets Storage Transportation • Electric • LDCs Retail Customers: Generators • Industrial • Trading • Commercial Counterparties • Residential 32
  • 32. Energy Services Sources of Margin Approximately 75 Percent From Storage and Transportation • Differential- and Baseload, swing and peaking Storage 2008G 49% demand-based services 2007 60% 48% 2006 Marketing & risk management Differential- and fee- Transportation 2008G 24% services to producers and markets based 2007 27% Maximize delivered value 32% 2006 Differential-, commodity- Enhance margins through application Optimization 2008G 14% and derivative-based of market knowledge and risk- risk 2007 0% management skills 5% 2006 Commodity- and fee- Provide supply and risk-management Retail 2008G 12% based services to industrial, commercial and 2007 6% residential customers 7% 2006 Differential-, commodity- Extract margins using primarily Trading 2008G 1% and derivative-based derivatives, leveraging our physical 2007 7% positions through market knowledge, 8% 2006 volatility or inefficiencies 33
  • 33. Appendix ONEOK Partners 34
  • 34. ONEOK Partners Overview Natural Gas Gathering & Processing Natural Gas Pipelines Natural Gas Liquids Gathering & Fractionation Natural Gas Liquids Pipelines Growth Projects 35
  • 35. Earnings Growth Delivering Consistent Growth and Stable Earnings • Diverse asset base provides significant $653 Operating Income* $254 fee-based income and stable earnings Natural Gas $445 Gathering & Processing $396 • Strategy execution $130 Natural Gas results in significant Pipelines $253 $257 earnings growth $214 NGL Gathering & – Particularly in NGL Fractionation 21% CAGR Pipelines beg pe es beginning g in 2009 NGL Pipelines $57 2004 2005 2006 2007 2008G *Millions of dollars, excluding gain/loss on sale of assets 36
  • 36. Stable Cash Flow Financial Strength • Predominantly fee based y – Large growth projects increase Sources of Margin fee-based income $896 Million $1.2 Billion $844 Million 12% 13% • Commodity and spread risk 18% is measured and managed 28% 27% 26% within each segment • Equity earnings are also primarily fee based 60% 60% 56% – 2008 Guidance: $94 million 2006 2007 2008 Guidance y p Fee Commodity Spread 37
  • 37. Strong Balance Sheet Financial Discipline • Disciplined approach to raising p pp g • Capital structure p capital for growth – Goal: 50/50 capitalization • Common unit offering in March – Strong credit rating 2008 generating net proceeds 2008, • ONEOK interested in increasing of $460 million ownership of ONEOK Partners • Liquidity at October 31, 2008 – $396 million cash and cash illi hd h Total equivalents Equity Debt 50% – $130 million available under 50% existing $1 billion revolver Capitalization September 30, 2008 38
  • 38. Distribution Coverage Financial Discipline $6.19 Distributions Declared Per Unit • Target coverage ratio of g g Distributable Cash Flow Per Unit Coverage Ratio 1.05x to 1.15x $4.92 • Some distributable cash $4.48 $4.26 $4.15 $4.025 flow t i d to fund fl retained t f d $3.78 $3 78 $3.71 $3.20 $3.20 growth • Other considerations – Commodity prices 1.45 – Overland Pass option 1.30 1.22 1.16 1.19 – Capital market conditions 2004 2005 2006 2007 2008 Guidance* * Assumes q quarterly p y y payment for Q4 at indicated amount 39
  • 39. Distribution Growth Creating Exceptional Value for Unitholders • ONEOK as sole general g partner Distributions Paid Per Unit – 11 consecutive distribution $1.08 $1.06 increases $ $1.04 $1.025 $1 02 $1.01 $1.00 • Continued opportunities for $0.99 $0.98 $0.97 $0.95 distribution growth $0.88 $0 88 11% CAGR $0.80 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 40
  • 40. Value Creation Delivering Consistent Growth and Stable Earnings • General partner with p T t l U ith ld R t Total Unitholder Return aligned interests Unit Price Total Return $70 140% • Demonstrated financial $67.50 $60 120% discipline di i li $59.46 $57.50 $50 100% $56.25 $50.73 • Visible growth profile $48.24 $47.92 $47.85 $45.75 $40 80% 79% – $2 billion under way $42.10 $30 60% – 2010–2015: $300 - $500 $20 40% million per year $10 20% ONEOK Partners Alerian MLP Index $0 0% 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 *Unit prices are closing prices at last day of quarter 41
  • 41. Natural Gas Diverse Asset Base Grasslands Plant • Two segments Expansion Guardian II Expansion – Natural Gas Gathering & Processing – Natural Gas Pipelines Fort Union Gas • Diverse supply basins, Gathering Expansion producers and contracts mitigate earnings volatility in gathering and processing Midwestern • Earnings on pipelines are Extension predominantly fee based • More than $600 million of internal growth projects under way through 2009 y g Natural Gas Gathering Pipeline Natural Gas Processing Plant Natural G Interstate Pipeline Gas Natural G S Gas Storage Natural Gas Intrastate Pipeline Growth Projects Northern Border Pipeline (50% interest) 42
  • 42. Natural Gas Gathering & Processing Providing Non-discretionary Services to Producers Gathering – M than 14 00 miles of pipeline More h 14,500 il f i li – Approximately 9,000 meters – 1,060 MMcf/d* gathered Williston Compression – More than 625,000 Bhp Powder River Wind River Treating – Removal of water and other contaminants Kansas Uplift Hugoton Processing Anadarko – 13 plants with 725 MMcf/d capacity – 555 MMcf/d* processed MMcf/d *At third quarter 2008 43
  • 43. Natural Gas Gathering & Processing Successful Execution of Strategy • Diverse contract portfolio Contract Mix by Volume – More than 2,000 contracts 3% 3% 3% 6% 6% – No one contract accounts for 8% 1% 10% 1% 6% 15% 19% more than 10 percent of volume 32% 30% 27% – Average term slightly more than 34% 31% 25% two years • Contract restructuring has reduced commodity price 61% 61% 61% 53% sensitivity and increased fee 52% 51% revenues • Conditioning language on 83 2003 2004 2005 2006 2007 2008G percent of keep-whole contracts reduces spread risk Fee Based Percent of Proceeds Keep Whole Keep Whole w/ Conditioning 44
  • 44. Natural Gas Gathering & Processing Risk Mitigation Contract portfolio • Commodity Price Sensitivity* y y – Minimizes exposure to keep-whole Margin Impact ($ Millions) spread $4.8 $4.5 – NGL exposure diversified among $3.8 five individual products p Hedging strategy focuses on long $2.1 • $1.7 $1.5 $1.3 $1.1 $1.0 NGL, condensate and natural gas $0.9 $0.4 $0.5 positions $0.4 $0.3 -$0.1 -$0 1 – Target 75 percent of expected production -$1.6 Hedged position: • -$2.7 -$3.5 2006 2007 2008 2003 2004 2005 Fourth Quarter 2008 Commodity Sensitivity NGLs & Condensate 63% $1.37 / gallon Natural Gas Liquids 1 cent/gallon increase Natural Gas 56% $9.61 / MMBtu Natural Gas 10 cent/MMBtu increase Crude Oil $1/barrel increase Full Year 2009 2009: *Excludes effects of hedging NGLs & Condensate 21% $2.35 / gallon 45
  • 45. Natural Gas Gathering & Processing Strong Focus on Natural Gas Supply Natural Gas Gathered * • Natural gas supplies from six g pp BBtu/d basins 1,174 1,182 1,168 1,171 • Significant drilling activity under way in the Powder River River, Williston and Anadarko basins 801 800 852 908 • Well connects outpacing prior years, JJanuary –September: Stb – 2008: 330 – 2007: 263 373 371 316 274 • Approximately $30 million annual growth capital for new 2005 2006 2007 2008 Sept. YTD well connections Rocky Mountain Mid-Continent * Volumes based on existing asset base 46
  • 46. Natural Gas Pipelines Key Points • Stable markets and diverse Viking Gas Transmission supply basins Northern Border • Predominately fee-based Pipeline Guardian Pipeline iincome • Storage provides valuable Midwestern Gas services Transmission • Regulation at the state and federal level Pipelines 6,900 miles, 5.3 Bcf/d peak capacity Natural Gas Interstate Pipeline Storage 51.6 Bcf active working capacity Natural Gas Intrastate Pipeline 50% Northern Border Pipeline Equity Natural Gas Storage Investment Northern Border Pipeline (50% interest) 47
  • 47. Natural Gas Liquids Largest Gatherer and Fractionator of NGLs in the Mid-Continent • Two segments g – NGL Gathering & Fractionation – NGL Pipelines Overland Pass Pipeline • Connect large supply position to major market centers and Piceance Lateral end-use demand D-J Lateral • Provide a full range of non non- NGL Upgrade discretionary services to our Projects Woodford Extension customers •OOpportunities f growth t iti for th Arbuckle Pipeline through major expansions into new supply areas NGL Storage g NGL Pipelines NGL Fractionator NGL Gathering & Fractionation NGL Market Hub NGL Growth Projects 48
  • 48. NGL Gathering and Fractionation Providing Non-discretionary Services to Customers Gathering – M th 2 500 miles of pipeline More than 2,500 il f i li – Access to 82 natural gas processing plants, more than 90 percent of the Mid-Continent region’s plants Fractionation – Approximately 550,000 Bpd (net) capacity – Isomerization 9,000 Bpd capacity Storage – Underground caverns with capacity of 24 6 million b l f 24.6 illi barrels Marketing NGL Market Hub NGL Fractionator – NGL products to end-users NGL Storage NGL Gathering Pipeline G th i Pi li NGL Growth Projects 49
  • 49. NGL Gathering & Fractionation Fee-based Earnings with Optimization Opportunities Sources of M i S f Margin Fee-based Gather, fractionate, transport and Exchange & 2008G 70% store NGLs and deliver to market Storage Services 73% 2007 hubs 2006 78% Differential-based Purchase for resale Marketing 2008G 6% approximately one-half of system 2007 13% supply in the Mid-Continent on 8% 2006 an index-related basis Differential-based Obtain highest product price by Optimization 2008G 21% directing product movement 2007 8% between market hubs 5% 2006 2008G 3% Differential- and Convert normal butane to Isomerization 2007 fee-based 6% isobutane 9% 2006 50
  • 50. NGL Gathering & Fractionation Strong Focus on NGL Supply • Significant volume g g growth in the Mid-Continent from 19 new processing p g plant connections and growth from existing connections • Rockies, Barnett Shale and Woodford Shale provide additional growth Gathering Volume Fractionation Volume MBpd MBpd 251 253 385 391 246 243 371 375 370 232 349 333 326 224 312 319 309 213 208 210 210 275 281 193 193 189 26% Growth 21% Growth 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 51
  • 51. NGL Pipelines Key Points • Links key NGL market y centers at Conway, Kansas, and Mont Belvieu, Texas • N th System connects Mid North S t t Mid- Continent to upper Midwest refiners • Developing links to the NGL Distribution Pipeline NGL Gathering Pipeline Rockies and Barnett Shale Growth Projects NGL Market Hub NGL Fractionator NGL Storage Distribution 3,350 miles of pipe with 434,000 Bpd capacity Gathering 720 miles of pipe with 93,000 Bpd capacity 52
  • 52. NGL Pipelines Key Points • Delivers to the petrochemical and • Primary supply sources in Mid- refining industries f Continent and Rockies, and soon-to- be north Texas, with connections to: – Texas Gulf Coast – 23 natural gas processing plants, – Mid-Continent with access to another 59 – Midwest – 8 fractionators • Regulation – 8 storage facilities – FERC-approved tariffs FERC approved – 4 refineries Markets Supply Fractionators Processing Plants Storage Petrochemical Refining Heating 53
  • 53. NGL Pipelines – North System Strategic Acquisition Creating Value • Extends distribution network into upper Midwest • Connects to Mid-Continent supply and Bushton storage – Seasonal refinery-grade butane and propane • Opportunities for growth North System – Diluent and denaturant NGL Distribution Pipeline NGL Gathering Pipeline – Propylene Growth Projects NGL Market Hub • Adds refined petroleum NGL Fractionator NGL Storage products to value chain Distribution 1,630 miles of pipe Capacity for Purity & 134,000 Bpd of transport Refined Products 978,000 Bbl of storage 54
  • 54. Appendix ONEOK Partners - Growth Projects 55
  • 55. Capital Expenditures Complements Existing Infrastructure and Core Operating Capabilities Current Growth Program, 2007-2009 g , Growth Capital Expenditures • $2 billion of internally generated projects and routine growth $1,230 • EBITDA* generated EBITDA $950 spent through – Primarily fee based Oct.-08 $ In Millions $878 – 2009: $250 million $650 $300-$500 – 2010 $360 million 2010: illi n per year $365 $462 Looking Forward, 2010-2015 $233 $352 • $300 - $500 million of growth $188 $132 projects per year 2007 2008 2009 2010-2015 – Two-thirds in Natural Gas Natural Gas Liquids Natural Gas q Liquids * EBITDA contributions assume projects are completed on schedule * Does not include WMB exercising its 50/50 option in OPPL, Piceance Lateral or D-J Lateral 56
  • 56. ONEOK Partners – Growth Status MAJOR PROJECTS*: Contracts / Volumes Fee Based Expected In Service Long-term supply agreement Overland Pass Pipeline In Service with Williams Infrastructure upgrades to Related NGL projects In Service accommodate growth Dedicated supplies from Devon Woodford Shale extension In Service and Antero processing plants Fort Union Gas Gathering expansion (37%) Fully subscribed In Service Midwestern Extension Fully subscribed In Service Natural Gas Liquids Projects under way Arbuckle Pipeline Anchor customers committed First Quarter 2009 Connecting to five gas D-J Lateral Pipeline First Quarter 2009 processing facilities Dedicated supplies from two Piceance Lateral Pipeline Third Quarter 2009 Williams plants Willi lt Natural Gas Projects under way Supply growth driven by drilling Grasslands Plant expansion Fourth Quarter 2008 and production Anchored by two 15-year 15 year Guardian Pipeline t i G di Pi li extension Fourth Quarter F th Q t 2008 agreements 57
  • 57. Natural Gas Gathering & Processing Growth Projects Grasslands Processing Plant Project Status Costs $40 - $45 Million Completion Fourth Quarter 2008 Dates Phase 1 Phase 2 Processing plant Permits tie-ins completed approved Construction Equipment completed ordered Grasslands Expansion Phase 1: Processing Increased from 63 to 100 MMcf/d capacity Phase 2: Fractionation Increased from 8 to 12 MBpd capacity 58
  • 58. Natural Gas Gathering & Processing Growth Projects Fort Union Gas Gathering Project Status P j t St t Costs $120 - $130 Million (Project Financed) Completion In Service Dates Phase 1 Phase 2 Customers Customers committed * committed * Construction Construction complete complete ONEOK Partners Gathering Fort Union (37%) In service 11/07 In service 7/08 Lost Creek (35%) Big Horn (49%) • Backed by volume commitments * • Doubled capacity Fort Union Gas Gathering Phase 1: Adds 44 miles of pipe and 200 MMcf/d capacity Phase 2: Adds 104 miles of pipe and 450 MMcf/d capacity 59
  • 59. Natural Gas Pipelines Growth Projects Guardian Pipeline Project Status Costs $277 - $305 Million Completion Fourth Quarter 2008 Date Customers Pipe ordered committed * Right of way Pipe delivered possession Construction 80% Permits complete Existing Pipeline • Fully subscribed * Proposed Extension • Anchored by two 15-year agreements * Guardian Pipeline Capacity Incremental of 537 MMcf/d to eastern Wisconsin Extension 119 miles from Ixonia to Green Bay 60
  • 60. NGL Pipelines Growth Projects Overland Pass Pipeline Project Status Cost $575 - $590 Million Opal Echo Springs •Partial operations have commenced Completion ~30,000 ~30 000 Bpd Date •Fully operational in fourth quarter 2008 Anchor customers Pipe ordered committed * Public right of Construction way acquired contracts let Permit approved and Construction Overland Pass Pipeline federal right of complete way acquired yq Overland Pass Pipeline Pipeline 760 miles, 14-16” • 99/1% joint venture with 50/50 option within two years of first flow Capacity • 110,000 Bpd of raw NGLs with two pump • Dedicated supplies from two Williams plants (~60,000 Bpd) in Wamsutter stations Area and two Williams plants in Piceance Basin (~30,000 Bpd) * • Expandable to 255,000 Bpd with additional • Additional commitments of 110,000 Bpd in various stages of negotiation pump stations 61
  • 61. NGL Pipelines Growth Projects Piceance Lateral Project Status Cost $110 - $140 Million Completion Third Quarter 2009 Date Anchor Permitting customers approved committed * Right of way g y Construction In I progress acquired underway • 99/1% joint venture with 50/50 option within two years of first flow Overland Pass Pipeline • Dedicated supplies from two Williams plants (~30,000 Bpd) * Piceance Lateral • Additional commitments in various stages of negotiation Piceance Lateral Pipeline 150 miles, 14” Capacity 100,000 Bpd of raw NGLs 62
  • 62. NGL Pipelines Growth Projects D-J Lateral Project Status Cost $70-$80 Million Completion •Partial startup in fourth quarter 2008 •Fully operational in first quarter 2009 Date Customers Pipe ordered committed Right of way Construction In progress acquired underway • Connecting to five processing plants (~33,000 Bpd) Overland Pass Pipeline D-J Lateral • Additional growth potential of 10 000 Bpd from drilling and 10,000 plant upgrades in next two years D-J Lateral Pipeline 125 miles, 6- to 12-inch Capacity 55,000 Bpd of raw NGLs 63
  • 63. Natural Gas Liquids Growth Projects Infrastructure Upgrades Project Status Cost $230 - $240 Million Expand facility from 80,000 to 150,000 Bpd Bushton Phase I - complete Fractionator • Phase II – fourth quarter 2008 Upgrade facility to accommodate additional Bushton Storage ethane/propane mix Construction complete Construct 135-mile pipeline with a capacity of Bushton-to- 120,000 Bpd of ethane/propane mix Medford Pipeline Construction complete Expand pipeline by 60,000 Bpd Sterling Expansion gp Construction complete Bushton-to- Expand pipeline by 14,000 Bpd Conway Expansion Construction complete NGL Gathering & Fractionation NGL Pipelines NGL Storage NGL Fractionator NGL Market Hub 64
  • 64. NGL Gathering & Fractionation Growth Projects Woodford Shale Pipeline E t Pi li Extension i Project Status NGL Gathering Pipeline Woodford Extension Cost $36 Million NGL Storage NGL Fractionator Completion NGL Market Hub In Service Date Anchor Pipe customers delivered committed * Right of way Construction acquired complete • Connecting to two processing plants, operated by Devon g p gp ,p y Energy and Antero Resources, in southeast Oklahoma Woodford Shale Pipeline Extension Pipeline 78 miles, 6-8” Expected Volume E t dV l 25,000 Bpd f 25 000 B d of raw NGL NGLs 65
  • 65. NGL Pipelines Growth Projects Arbuckle Pipeline Project Status NGL Gathering Pipeline NGL Pipeline Cost $340 - $360 Million NGL Arbuckle Pipeline NGL Storage g Completion First Quarter 2009 NGL Fractionator Date NGL Market Hub Anchor Permits customers received committed * 80 miles il Pipe Construction delivered underway complete • Expect approximately 65,000 Bpd at start up, and indications of interest that could add 145,000 Bpd of supply within the next three to five years • Major expansion into one of the most active drilling areas in the U.S. • Allows delivery to Gulf Coast fractionators Arbuckle Pipeline Pipeline 440 miles, 12-16” Capacity • 160 000 Bpd of raw NGLs with four pump 160,000 stations • Expandable to 210,000 Bpd with additional pump stations 66

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