Pembina completes expansion, eyes further steps

07 July 2017, Week 26, Issue 465

Calgary’s Pembina Pipeline has brought its Phase III pipeline expansion and two delivery points into operation, the company said on July 4, noting this represented C$2.8 billion (US$2.16 billion) of spending. The expansion project is the largest capital investment in the company’s history. 

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“At the outset of these projects, we committed to constructing large-scale, multi-year-build assets on time and on budget, and I’m proud to say that we’ve successfully delivered on that promise, with the overall portfolio coming in under budget by approximately 8% and either on time or ahead of schedule,” said Pembina’s president and CEO, Mick Dilger. The executive went on to say another C$3 billion (US$2.3 billion) of assets would be put into service by the end of 2018. 

The Phase III expansion project made up the majority of the capital, at C$2.44 billion (US$1.88 billion). The company did not break out costs for the two delivery points, the third fractionator at Redwater and the Canadian diluent hub. Previously, the company has suggested the diluent hub might require C$215 million (US$165.8 million) and C$415 million (US$320.1 million) for the fractionator. 

This Phase III expansion covers the installation of 900 km of new pipeline, along existing rights-of-way, and upgrading and adding new pump stations. The project also included debottlenecking existing pipelines, from Taylor in British Columbia to Gordondale in Alberta, and adding a new link from Wapiti to Fox Creek, also in Alberta. The development is backed up with long-term contracts and adds 420,000 bpd of capacity between Fox Creek and Namao, through the construction of two pipelines, both running for around 290 km. 

As a result of this expansion, it said, it has four pipelines from Fox Creek to Namao, capable of carrying four different hydrocarbons: ethane-plus, propane-plus, condensate and crude oil. Construction on the development began in August 2016.

Pembina now has more than 850,000 bpd of capacity between its Peace and Northern pipelines, which connect to Namao. It has also secured a contract for another 180,000 bpd of capacity, through the addition of two pumping stations, between Fox Creek and Namao, known as the Phase IV expansion. Phase V is also being considered, which would involve looping a pipeline between Lator and Fox Creek. 

The Redwater fractionator adds 55,000 bpd of propane-plus capacity, bringing the complex to 210,000 bpd. 

“We are focused on providing market access solutions for our customers for the products coming off the back end of our fractionators – particularly propane – which will ultimately help add value to the incremental barrels and serve to increase producer netbacks,” said Pembina’s vice president for NGL, Stuart Taylor. “In support of this, we are working to further expand our service offering down the value chain by proposing to develop both an integrated propylene and polypropylene production facility and a West Coast liquefied petroleum gas [LPG] export terminal.” In April, the company signed a letter of intent (LoI) choosing Watson Island, Prince Rupert, as a potential export site. 

On May 1, Pembina announced plans to acquire Veresen, through a mixture of shares and cash, for around C$9.7 billion (US$7.5 billion). The deal is expected to close in the second half of this year. The move will provide Pembina with a greater footprint in the US, moving it from 21% at present to 28%. 

 

Edited by

Anna Kachkova

Editor

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