Pembina to proceed with US$ 2 billion pipeline expansion

Pembina Pipeline Corporation (Pembina) has announced that it has reached binding commercial agreements to proceed with constructing approximately US$ 2 billion in pipeline expansions.

Phase III Expansion

The Phase III Expansion is underpinned by long-term take-or-pay transportation services agreements with 30 customers in Pembina's operating areas and is expected to be in service between late 2016 and mid 2017, subject to environmental and regulatory approvals.

The 540 km Phase III Expansion will follow and expand upon certain segments of the company's existing pipeline systems from Taylor, British Columbia southeast to Edmonton, Alberta to fulfill capacity needs for Pembina's customers, with priority being placed on areas where debottlenecking is essential.

Construction

The core of the Phase III Expansion will entail constructing a new 270 km 24 in. dia. pipeline from Fox Creek, Alberta, to the Edmonton area, which is expected to have an initial capacity of 320 000 bpd and an ultimate capacity of over 500 000 bpd with the addition of midpoint pump stations.

Once complete, Pembina will have three distinct pipelines in the Fox Creek to Edmonton, Alberta corridor. With the Company's existing pipelines and current expansions, these three pipelines are expected to have the designed capacity to transport up to 885 000 bpd.

The Phase III Expansion also contemplates increasing pipeline interconnectivity between Edmonton and Fort Saskatchewan, including Pembina's Redwater and Heartland Hub sites, as well as third-party delivery points in these areas. This interconnectivity will provide the option for customers to access a broad variety of delivery points including fractionators, refineries, and storage hubs and increased access to pipeline and rail take-away capacity.

Benefits

Mick Dilger, Pembina's President and Chief Operating Officer said, "[The Phase III Expansion] provides customers an inclusive solution, as it will increase crude oil, condensate and NGL take-away capacity from northwestern Alberta and northeastern British Columbia to markets in the Edmonton and Fort Saskatchewan areas. When complete, it will also create operational efficiencies and improved customer service by reducing the need for us to batch products throughout our systems."

The contracts underpinning the Phase III Expansion are ten-year transportation services agreements for volumes that average over 230 000 bpd, or approximately 75% of the initial capacity, and that provide a steady, long-term EBITDA stream which is expected to be, on average, in the range of approximately US$ 270 million to US$ 300 million per year.

With the addition of the Phase III Expansion, Pembina's previously announced 2014 capital spending plan will increase from $1.5 billion to $1.7 billion. Pembina expects the majority of spending associated with this project will occur during the main construction periods from 2015 through 2016.

Adapted from press release by Hannah Priestley-Eaton

Read the article online at: https://www.worldpipelines.com/business-news/23122013/pembina_to_proceed_with_us_2_billion_pipeline_expansion/