A corporate team from Calgary, Tulsa and New York City on Tuesday announced a C$1.3 billion ($975 million) plan to complete by first-half 2022 a pair of natural gas liquids (NGL) pipelines for growing Alberta production.
Keyera Corp. and the SemCAMS Midstream ULC partnership of SemGroup Corp. with KKR & Co. set a target of mid-2020 to obtain regulatory approvals and start construction on the conduits, named Key Access Pipeline System (KAPS).
The project caters to growing output from the liquids-rich Montney and Duvernay natural gas formations with a line 16 inches in diameter for gasoline-like condensate and a 12-inch diameter line for lighter byproducts.
Parallel processing plant expansions by the KAPS partners are forecast to have combined capacity for 2.25 Bcf/d of gas and 130,000 b/d of condensate by the time the new liquids pipelines are built.
The system would span about 500 kilometers (300 miles) of Alberta from the northwestern gas-field capital of Grande Prairie to the petrochemical, refining and trading hub at Fort Saskatchewan, near the provincial capital in Edmonton.
KAPS is anchored by multiple service agreements lasting an average of 14 years for 60% of initial capacity. More contracts are being offered, and maximum deliveries could increase by adding pumps, said the project partners.
"We are confident in the outlook for this condensate-rich region in northwestern Alberta,” Keyera President David Smith said.
“As Alberta’s low-cost natural gas plays continue to develop, customers are searching for competitive options to move NGLs and condensates,” SemCAMS President Dave Gosse added.
Keyera, which is to operate the system, and the U.S.-owned SemCAMS partnership in Calgary each would own 50% of KAPS. The team predicted the new liquids service would earn returns of 10-15% on capital starting in 2024.