A SaskEnergy subsidiary and Calgary-based Mistral Midstream Inc. have formed a joint venture (JV) to build a facility in southeast Saskatchewan to extract ethane and other hydrocarbons from natural gas from the Bakken formation being transported on the SaskEnergy system.

Bayhurst Energy Services Corp. (BESCO) will have a 10% share of the $72.5 million facility, which will be located near Viewfield, SK, “in an area of the province where natural gas liquids (NGL) must be removed from natural gas before it meets the specifications to allow it to be delivered to homes and businesses in Saskatchewan,” SaskEnergy said.

NGLs recovered that the plant recovers from SaskEnergy’s natural gas pipeline system will be marketed to commercial and industrial customers, and the natural gas will then be compressed and re-injected into the transmission pipeline.

Construction of the facility is set to begin in 2014 and the plant is expected to be operational in early 2015, SaskEnergy said.

“As oil and gas producers develop the Bakken play, it is important that the infrastructure that supports this investment in Saskatchewan provides sustainable market access and value to all stakeholders,” said Mistral Midstream CEO Terry Killackey. “Our venture with BESCO, which targets NGLs, will be an important element of the hydrocarbon value chain that is being established in Saskatchewan.”

The project will provide SaskEnergy with revenue sources related to accessing gas for extraction, the amount of NGLs produced by the plant, and the increased volume of natural gas delivered on the system, the company said.

SaskEnergy is a Crown corporation that delivers natural gas to more than 365,000 residential, farm, commercial and industrial customers throughout Saskatchewan. The company’s 68,100-kilometer distribution system provides gas purchased from independent suppliers to 93% of the province’s communities.