Pembina Pipeline reveals plans for diluent terminal development

Pembina Pipeline Corporation has announced plans to proceed with construction of the Canadian Diluent Hub (CDH), a large-scale condensate and diluent terminal at its Heartland Terminal site near Fort Saskatchewan, Alberta.

The initial phase of CDH development is estimated to cost US$ 350 million and will include 600 000 bbls of above ground storage, multiple inbound and outbound pipeline connections, plus associated pumping and metering facilities. In anticipation of future customer demand and as part of an anticipated second phase of development, Pembina has also completed detailed engineering studies for the construction of additional rail facilities and underground cavern storage development.

The Canadian Diluent Hub is designed to augment Pembina's existing diluent handling facilities in the Fort Saskatchewan area which includes approximately 20 000 bpd of rail import capacity, 500 000 bbls of underground diluent storage and approximately 180 000 bpd of existing delivery capacity to third-party diluent delivery pipelines. The proposed facilities are designed to accommodate contracted diluent supply volumes from the company's previously announced field gas plant, pipeline and natural gas liquids (NGL) fractionator expansions. The company expects CDH to become a new market hub for condensate and other diluents by offering customers:

• Direct access to a growing and diverse diluent supply through Pembina and third-party pipeline connections.
• A variety of condensate qualities, crude grades and synthetic crude oil.
• Segregation infrastructure and flexibility to accommodate proprietary and premium diluent blends.
• Direct connectivity to third-party market terminals and pipelines that supply and serve oil sands producers.
• Marketing services to facilitate supply aggregation.
• Above ground and cavern storage services.
• Access to rail import facilities and future export connections.

"We are excited to communicate our vision for the Canadian Diluent Hub," said Paul Murphy, Pembina's Senior Vice President, Pipeline & Crude Oil Facilities. "As the terminus of Pembina's condensate pipeline for its Peace system, the Heartland site is ideally-located adjacent to all major diluent pipelines servicing the Athabasca oil sands producing region. This development, combined with our existing asset base, will allow us to provide our customers with a reliable and cost-competitive supply of not only condensate, but other diluents such as light sweet crude, synthetic crude oil and custom diluent blends. We expect CDH will become the preferred point of access to satisfy growing diluent demand in the Heartland area."

The concept for CDH evolved as an extension of Pembina's Nexus Terminal, which includes Pembina's terminal assets in the Namao, Edmonton, Redwater and Fort Saskatchewan areas of Alberta. The company's previously announced pipeline and NGL fractionation expansions will provide customers with a dedicated condensate supply system. This system, which originates in Northeast British Columbia and spans throughout Northwest Alberta, directly links Pembina's NGL fractionation supply to the Heartland area demand centre.

"Once we complete our pipeline system expansions and NGL fractionators, we expect to be the largest domestic supply source for condensate in Alberta," said Murphy. "The Canadian Diluent Hub is being driven by increasing production volumes from the ongoing development of the Montney and Duvernay formation resource plays in our service areas. Production from these plays is fueling infrastructure development and with our access to condensate, customers are keen to have us expand our diluent service offerings. It is also being driven by customer support to further develop the existing energy hub in the Alberta Industrial Heartland, due to its proximity to oil sands and diluent pipelines and associated terminals. CDH builds on the condensate services we already offer and will create incremental solutions for our customers while supporting long-term shareholder value."

Site preparation began in late-2013 and is on-going. Subject to further regulatory and environmental approvals, Pembina anticipates phasing-in incremental storage and pipeline connections to regional condensate delivery systems in 2016 with a view to achieving full connectivity of and service offerings at CDH in the second quarter of 2017.

Adapted from press release by Rosalie Starling

Read the article online at: https://www.worldpipelines.com/business-news/10102014/pembina-pipeline-reveals-plans-for-diluent-terminal-development-895/