TULSA — ONEOK Inc. announced Monday it will discontinue its energy services segment, which has logged operating losses of more than $50 million in each of the past two years.
The services segment is involved in natural gas storage and transportation.
“The energy services segment continues to face challenging industry conditions that show no signs of improving,” CEO John W. Gibson said. “Increased natural gas supply and infrastructure, coupled with lower natural gas price volatility, have narrowed seasonal and location natural gas price differentials, resulting in limited opportunities to generate revenues to cover our fixed costs on this contracted storage and transportation capacity.”
Gibson said the segment does not fit with ONEOK's long-term strategy and vision.
“We will continue to focus our resources on gathering, processing, transporting, storing, fractionating and distributing natural gas, natural gas liquids and other energy commodities through our ONEOK Partners and natural gas distribution segments,” he said.
The services segment is expected to be classified as discontinued operations by April 2014 as ONEOK begins releasing third-party transportation and storage contracts to interested parties.
ONEOK expects the accelerated wind down of its service segment to result in about $70 million in losses over the next two years. There also could be up to $100 million in after-tax write downs.