Pembina Pipeline Corp. said it plans to add infrastructure and increase operational flexibilities to an Alberta oil pipeline expansion designed to support future growth in the Deep Basin and Montney Shale, after receiving increased demand for its services.
The Calgary-based company said Thursday its conventional pipeline business has continued receiving customer demand for its transportation services and secured an additional 30,000 b/d in volume commitments since it first announced the Phase V pipeline expansion last April. Pembina also revised its capital cost estimate for the project by an additional C$135 million ($108.9 million), for a new total of C$385 million ($309.4 million).
Phase V would include a 20-inch diameter pipeline from Lator to Fox Creek, AB. The company said C$90 million ($72.3 million) in additional capital for the project would be devoted to increased receipt station functionality at Lator by adding 40,000 bbl of storage for operational crude and condensate, plus tie-ins; site modifications; a pump station near Dawson Creek, BC; and upgrades to an existing pump station at Gordondale, AB.
Pembina said the remaining C$45 million ($36.2 million) would go toward capital cost refinements, including changes to volume receipt locations.
The enhancements would allow Pembina to increase its pipeline capacity by an incremental 45,000 b/d upstream of Laglace, AB. "In addition to accommodating further customer demand, this will improve operational efficiencies and offer more optionality, which will ultimately provide a better service offering for Pembina's customers," the company said.
Phase V, which was designed to address capacity constraints between Lator and Fox Creek, is also expected to provide additional capacity through the corridor and access to Pembina's downstream capacity at Fox Creek.
Pembina said clearing activities and access to the pipeline right-of-way is currently 90% complete, and expects to begin construction soon. The company expects to put Phase V into service in late 2018. Once operational, Pembina would have three pipelines between Lator and Fox Creek.
Last July, shareholders of Pembina and Calgary-based Veresen Inc. approved a pending C$9.7 billion ($7.8 billion) merger. The Court of Queen's Bench of Alberta also approved the merger, which would create one of Canada's largest midstream energy infrastructure companies. The transaction, first announced in May, is expected to close this year.
In related news, Pembina also said Thursday that it was continuing to make progress with regulatory approvals, design and engineering of two pump stations for its previously announced Phase IV pipeline expansion, which will increase capacity between Fox Creek and Namao, AB.