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Pembina announces gas processing infrastructure development

Published by
World Pipelines,

Pembina Pipeline Corporation is planning to construct, own and operate a new 100 million ft3/d shallow cut gas plant (Duvernay I) in close proximity to Pembina's Fox Creek Terminal. The expected capital cost for this project, including supporting infrastructure, is expected to be approximately CAN$125 million.

Duvernay I, which is underpinned by a long term agreement with a large and diversified investment grade oil and gas producer, involves the construction of a new 100 million ft3/d shallow cut gas processing facility and incremental pipeline lateral capital. Pembina expects Duvernay I to have natural gas liquids (NGL) extraction capacity of approximately 5500 bpd, subject to gas compositions. Similar to the company's other gas processing facilities, the agreement for Duvernay I is take or pay in nature and will provide flow through of operating expenses. Subject to regulatory and environmental approval, Pembina anticipates bringing Duvernay I in service in 2H17.

"Pembina is very excited to be able to support the growth of the world class Duvernay resource play through the construction of the Facility, which represents the first large scale gas processing plant to be developed specifically for the Duvernay," said Stuart Taylor, Pembina's Senior Vice President of NGL and Natural Gas Facilities. "In spite of uncertainty in commodity markets, Pembina's customers continue to remain committed to the development of the Western Canadian Sedimentary Basin."

Duvernay I demonstrates the value of Pembina's integrated value chain service offering and creates a platform for growth in the Duvernay. NGL production from the facility will be transported on Pembina's Peace Pipeline system under a long term, take or pay agreement. These incremental volumes serve to further enhance Pembina's Peace Phase III expansion project, which is expected to provide 420 000 bpd of incremental liquids transportation capacity from Fox Creek to Namao (subject to regulatory approval). Additionally, an agreement for NGL fractionation at Pembina's Redwater Fractionation complex was executed.

The design of the Duvernay I plant closely resembles that of Pembina's two recent 100 million ft3/d shallow cut gas plants at its Cutbank Complex (Musreau II and Musreau III). Musreau II was completed ahead of schedule and on budget and Musreau III is expected to be completed ahead of schedule and under budget by mid-2016. "These encouraging results and expectations demonstrate the value of Pembina's proven 'assembly line' approach to project development," said Jaret Sprott, Pembina's Vice President, Gas Services. "I am confident, based on our proven track record of project development, that we will be able to deliver another successful project."

"In total, once Duvernay I is complete, Pembina's Gas Services business will have approximately 1.6 billion ft3/d of gas processing capacity and will produce over 75 000 bpd of NGLs for transportation on our conventional pipelines," said Sprott. "We are happy to be adding another long term, contracted asset to our portfolio that will feed into our integrated businesses. Repeatable projects like this benefit both our customers and shareholders and continue to support sustainable returns."

Adapted from press release by Rosalie Starling

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