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News updates from Pembina Pipeline Corporation

Published by
World Pipelines,

Vantage pipeline acquisition

Pembina Pipeline Corporation has entered into agreements to acquire the Vantage pipeline system and Mistral Midstream Inc.'s interest in the Saskatchewan ethane extraction plant (SEEP) for total consideration of US$ 650 million, subject to traditional closing adjustments from certain entities affiliated with Riverstone Holdings LLC.

Transaction highlights

Vantage is a recently constructed 700 km, 40 000 bpd, high vapour pressure pipeline that originates in Tioga, North Dakota, and terminates near Empress, Alberta. Vantage provides long-term, fee-for-service cash flow and strategic access to the prolific and growing North Dakota Bakken play for future natural gas liquids opportunities. Key transaction highlights include:

  • Geographic diversification: the transaction provides geographic diversification of Pembina's pipeline and midstream infrastructure, providing access to a new and prolific resource play in North Dakota.?
  • Committed volumes: Vantage is underpinned by a long-term, take-or-pay transportation contract.
  • Expansion opportunities: Vantage is sized to reach an ultimate capacity of approximately 60 000 bpd through modest capital investment via the addition of two quarter point pump stations.
  • Cash flow per share accretion: The transaction is expected to be neutral to cash flow per share in 2015 and accretive in 2016 on the basis of minimum volumes currently under contract and a full year contribution from SEEP. Pembina foresees the potential for significant accretion as additional volumes are secured.

"I am very happy to announce our agreement to acquire Vantage and SEEP," said Mick Dilger, Pembina's President and Chief Executive Officer. "We have watched the development of these assets with great interest as they represent an excellent opportunity to expand our footprint into one of the most promising hydrocarbon plays in North America and, as such, the transaction is a low-risk, logical step-out for Pembina. We are excited to add this infrastructure to our leading portfolio of pipeline assets. Not only will the transaction augment our fee-for-service cash flow stream, but we expect opportunities associated with both Vantage and SEEP to result in long-term shareholder value."

Acquired assets

Vantage links a growing supply of ethane from the prolific North Dakota Bakken play to the petrochemical market in Alberta. It originates from a large-scale gas plant in Tioga, North Dakota, extending northwest, through Saskatchewan and terminating near Empress, Alberta, where it is connected to the Alberta ethane gathering system (AEGS) pipeline.

As part of the transaction, Pembina is also acquiring pipeline infrastructure from Mistral and Mistral's interest in SEEP, a development-stage, 60 million ft3/d (54 ft3/d net to Pembina) deep cut gas processing facility that is centrally located to service the southeast Saskatchewan Bakken region. The pipeline infrastructure includes an approximately 105 km, 4 in. ethane pipeline and an approximately 75 km gas gathering pipeline, both of which are currently under construction. SEEP will receive liquids-rich gas produced from the Viewfield and the Flat Lake gas plants and from TransGas' local system. The facility is underpinned by both a long-term ethane sales agreement and a long-term, fee-for-service processing agreement. SEEP is expected to produce approximately 4500 bpd of ethane and will connect into Vantage through a pipeline lateral that is also currently under construction. Pembina expects SEEP and the associated pipeline lateral to be in-service in mid-2015.

New propane export terminal

In other news, the company has selected the site for the its planned West Coast propane export terminal project. On 28 August 2014, Pembina entered into an agreement with the Port of Portland, Oregon, that sets forth the terminal site, which includes an existing marine berth, located within the city of Portland for the development of the Project. The terminal agreement also outlines the material commercial lease terms for the West Coast terminal. The terminal agreement now enables Pembina to begin the process of engaging and consulting with the neighbours of the project and other stakeholders within the city of Portland, municipal, state and federal governments, and all applicable environmental and regulatory authorities.

Under the agreement, Pembina will continue to progress detailed engineering work, undertake extensive environmental and regulatory reviews and assessments and, together with the Port, begin the process to obtain all the required permits and approvals for the development of the West Coast terminal.

Pembina intends to initially develop a 37 000 bpd propane export facility for an expected capital investment of approximately US$ 500 million and with an anticipated in-service date of early-2018. The company expects that the West Coast terminal will provide growing Canadian propane supply (that is derived from natural gas produced in Western Canada) with access to large, international markets while complementing Pembina's expanding integrated service offering for products that are derived from natural gas.

The Port is located in the city of Portland along the Columbia and Willamette rivers. The Columbia River provides deep-water access to the Pacific Ocean, which is approximately 180 km downstream. The Port has lands available for the installation of storage, piping and rail facilities and marine infrastructure associated with Pembina's project.

Adapted from press release by Rosalie Starling

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