Pembina Pipeline Corporation reached binding commercial agreements to proceed with construction of the next phase in its pipeline expansion project. The 540 kilometer, or 336 mile approximately $2 billion, phase III project will expand upon certain segments of the Company's existing pipeline systems from Taylor, British Columbia southeast to Edmonton, Alberta, Canada
The core of the Phase III Expansion will entail constructing a new 270 km, or 168 mile, 24-inch diameter pipeline from Fox Creek, Alberta, to the Edmonton area, which is expected to have an initial capacity of 320,000 barrels per day 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 if fully expanded. 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.
The company said 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.
"We initiated our previously announced Open Season in March to identify producers' pipeline capacity requirements beyond our expansions that are already underway," said Mick Dilger, Pembina's President and Chief Operating Officer. "The Phase III Expansion, which is the largest expansion of Pembina's systems in the Company's history, is the result of that process. The project 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."
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, the company said. Pembina expects the majority of spending associated with this project will occur during the main construction periods from 2015 through 2016.
"This is a watershed event for Pembina," said Bob Michaleski, Chief Executive Officer. "We are about to embark on the largest expansion the Company has ever undertaken - a project which will form the foundation for our Company's growth for years to come. I have always maintained that if we could build our assets again, we would build them in the same location they are today, except we would build them larger. The Phase III Expansion supports this sentiment and demonstrates Pembina's continuing ability to leverage its existing asset footprint to satisfy customer needs and drive long-term shareholder value."