$18.8 Billion Oneok-Magellan Deal to Form Massive U.S. Energy Infrastructure System

by | May 15, 2023

Oneok office building

(Credit: Oneok)

Oneok is acquiring Magellan Midstream Partners for $18.8 billion in a deal that will form one of the largest energy infrastructure companies in the United States.

Pipeline operator Oneok, which has a primary focus on natural gas and liquid natural gas, said the deal will increase its ability to transition to cleaner energy sources. The combined company will own more than 25,000 miles of liquids-oriented pipelines, with a significant presence in the Gulf Coast and mid-continent markets, Oneok said.

“Our expanded products platform will present further opportunities in our core businesses as well as enhance our ability to participate in the ongoing energy transformation with an increased presence in sustainable fuel and hydrogen corridors,” said Oneok President and CEO Pierce Norton said.

Oklahoma-based Oneok owns natural gas and liquid natural gas pipelines and storage facilities throughout the midwestern U.S. Magellan focuses mostly on refined fuels with pipelines and storage facilities throughout a similar region as well as storage facilities off the coast of Texas, and the company said it has access to nearly half of the country’s refining capacity.

The combined operation will have 44% of its business in liquid natural gas, and 21% in refined products, according to a report by Reuters. Liquid natural gas accounts for about a third of the energy consumption in the U.S., according to the Department of Energy, with most of it going toward electricity generation and heating. Liquid natural gas produces 40% less carbon dioxide than coal, and 30% less than oil making it one of the cleanest fossil fuels, according to National Grid.

Pipelines are also a growing focus in improving green energy infrastructure. The Mediterranean hydrogen pipeline project in Europe, for example, is expected to supply about 10% of the European Union’s hydrogen by 2030.

The combined value of the operations will be $60 billion, the companies said, and Magellan will become a subsidiary of Oneok and Norton will continue to be CEO. The transaction is expected to close during the third quarter of 2023 and is subject to customary closing conditions such as shareholder approval.

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