When local Fortune 500 company ONEOK formed an executive committee to develop a strategic acquisition framework, the committee assembled a list of companies it believed would maximize ONEOK’s potential and sustainability.

“Magellan was the one that kept coming to the top for several reasons,” said Pierce Norton II, president and CEO of Tulsa-based ONEOK. “Magellan is a company that generates a tremendous amount of cash flow with hardly any capital input.

“…To actually add that to the portfolio, it would really sustain the company for the long term. It gave us a lot of diversity. It gave us scope and scale, which helped our credit ratings. And the rest has been history here.”

Norton detailed that history --- ONEOK purchased Magellan Midstream Partners for $18.8 billion in a deal completed in September --- and shared other energy industry insights Wednesday at The University of Tulsa.

He served as headliner at TU’s Friends of Finance Executive Speaker Series, sharing the stage during a sit-down interview with Kathy Taylor, dean of the Collins College of Business. In his capacity as the Friends of Finance board president, Tulsa Regional Chamber President and CEO Mike Neal was the event’s emcee.

ONEOK is a leading midstream (storing and transporting) energy services provider with a roughly 40,000-mile network of natural gas and natural gas liquids pipelines.

Its buyout of Tulsa-based Magellan is believed to be the largest private transaction in state history. ONEOK reported a net income of $688 million in the fourth quarter of 2023, and in January it increased its quarterly dividend 3.7% to 99 cents per share.

Norton said Wednesday he has been impressed by how the companies have assimilated.

In fact, that synergy has spawned so many new ideas – more than 250to date – that ONEOK created an executive vice president to oversee all the integration and innovation work, he said.

“That was probably the biggest surprise to me, the way people came together,” Norton said. “But a lot of that is just the respect that we had for the Magellan employee base. Magellan had great people. ONEOK had great people, and together it is the true example that one plus one is three.”

As for where the energy sector is headed in the next decade, Norton talked about transformation.

“We actually consume as much coal and as much wood in the world today as we did 200 years ago,” he said. “So, it’s really more about added energy as opposed to transitioning away from something. I like to use the word transformation because the energy space is one of those things where you can use some of the skill sets and use some of the assets in different ways.

“…You can use or repurpose some of the things you’ve used before in one way and use them to do something else.”

With some experts estimating the planet’s population will reach 10 billion by 2050, Norton said it will be a cumulative effort in terms of energy resources.

“Because of the population growth and because of the standard of living that’s going to develop over the world, we are going to need all forms of energy,” he said. “So, I doubt very seriously that we are going to transition away from many of those.”

Earlier this month in Houston, Norton attended CERAWeek (Cambridge Energy Research Associates), a conference that convenes global leaders to advance new ideas and solutions to energy challenges.

Among the themes discussed were energy security and how generative artificial intelligence (AI) will affect the sector. New data centers needed to support the calculations of AI will cause a dramatic rise in global energy consumption, Norton said.

“AI is going to be a game-changer in the energy space,” he said. “Energy, at least the fossil fuel industry and others, it’s going to be around a long time. The world works on energy. It helps education. It helps poverty. It just lifts all boats, and we are going to need more of it.”

Amplifying the need for energy partnerships, he said it’s important that fossil fuels, renewables and nuclear energy work together because all three have shortfalls in terms of affordability, reliability and emissions.

“Fossil fuels, our weakness is emissions,” Norton said. “In renewables, the weakness is reliability. And in nuclear, the weakness is cost.

“But when the other two work with one that’s failing, it works. So, it’s the acknowledgment that there is no one perfect energy system out there, because each one of them have their Achilles’ heel.”

Turning to reducing greenhouse gas emissions, Norton emphasized the role nuclear energy could play.

“If we stand a chance to get to net sum zero (emissions) in whatever year you pick, whether it’s 2050, 2060, 2070, 2100, we have to crack that nut,” he said. “It’s got to be where nuclear is accepted, and it has to be where nuclear is affordable.

“…Nuclear is going to be really, really critical to the U.S. It’s absolutely the densest, cleanest form of energy out there.”