May 22, 2015 [OPIS] - Pembina Pipeline Corporation said on Thursday that it will provide terminaling services for the North West Redwater Partnership (North West) with respect to North West's planned Sturgeon bitumen refinery.
Separately, the company has entered into agreements to construct a new pipeline lateral in the Karr area of Alberta (Karr Lateral) to service growing production from the Montney resource play.
“The Sturgeon Refinery will be the first refinery to be built in Canada in 30 years and will add significant value to Alberta’s bitumen resources in a responsible and sustainable manner,” said Mick Dilger, Pembina’s CEO.
The terminaling services will be provided by Pembina to North West under a 30-year fixed return agreement and a 10-year natural gas liquids (NGL) mix purchase and sale agreement related to the third fractionator Pembina is constructing at its Redwater site.
Pembina expects a capital investment of $180 million will be required to construct the terminaling facilities.
The facilities include truck and rail loading, storage, as well as handling and processing equipment for a variety of products delivered from North West.
Subject to regulatory and environmental approvals, the facilities are expected to be in service mid-2017.
The 150,000-b/d bitumen blend refinery will produce diesel, diluent and other products for Alberta and the world markets, and the plant is scheduled for commercial operations in September 2017.
Previously, North West had entered into agreements for terminaling services with Provident Energy Ltd., which was acquired by Pembina on April 2, 2012. Since that time, the development of the project has progressed and changes have been included in the project’s scope. The $180 million of expected capital is included in Pembina’s previously disclosed suite of projects totaling $5.9 billion.
The company expects the Karr Lateral to cost $55 million and have a capacity of approximately 30,000 b/d. The Karr Lateral is underpinned by long-term, fee-for-service agreements, which include substantial take-or-pay commitments from several of Pembina’s customers.
A portion of the volume under contract on the Karr Lateral will be incremental to Pembina’s previously disclosed committed volumes. The Karr Lateral will flow from legal land description 01-28-65-03 west of the 6th meridian to Pembina’s terminal in the Lator area of northwest Alberta where several companies are developing significant Montney acreage.
Subject to regulatory and environmental approvals, Pembina expects the Karr Lateral to be in service in early 2016.
