Encana Corp. is continuing its plan to go deep for — and long on — natural gas liquids (NGL), taking the third step in a plan to triple NGL production from Alberta Deep Basin gas production over the next few years.
On Friday the company said it had reached an agreement for Pembina Pipeline Corp. to invest about C$230 million to expand processing and liquids extraction capacity at the Resthaven gas processing plant in west-central Alberta. The increase, which is to be achieved by modifying and expanding an existing shallow cut gas plant, is the first of a two-phase expansion and is scheduled to come online in late 2013.
With the initial expansion, Encana said it expects to boost NGL extraction at Resthaven from about 1,000 b/d to about 8,000 b/d. The second expansion is expected to provide Encana with another 4,000 b/d of extracted NGLs from its growing production in the region.
“Over the next number of years, we expect our NGLs extraction to triple from about 10,000 b/d to about 30,000 b/d following investment by industry-leading third-party midstream companies at three Alberta Deep Basin plants: Resthaven, about 12,000 b/d, Musreau, about 5,000 b/d; and Gordondale, more than 3,000 b/d, representing incremental growth of about 20,000 b/d of NGLs,” said Renee Zemljak, Encana executive vice-president for marketing, midstream and fundamentals.
The Resthaven area in west-central Alberta is known for its prolific liquids-rich gas supply. “The Resthaven facility represents a strategic step in building out our gas services business,” said Pembina CEO Bob Michaleski. “And, as is the goal with all of our projects, this opportunity will generate additional value through integration with our conventional pipelines and midstream and marketing services.”
Once operational, the initial phase of the Resthaven expansion will have gross capacity of 200 MMcf/d and 13,000 b/d of liquids extraction capability, with ultimate capacity of 300 MMcf/d, Pembina said.
“The addition of deep-cut facilities adds significant value to our natural gas production due to the price uplift that is generated when we extract and sell higher-value ethane, propane, butane and condensate,” Zemljak said.
The first step in Encana’s NGL initiative is set to start up in December when the company expects to add about 5,000 b/d of NGL production from expanded facilities that Pembina has installed at its Musreau gas processing plant about 30 kilometers (19 miles) northwest of the Resthaven plant.
The second step was initiated late last year when Encana agreed to a long-term processing arrangement with a midstream company to construct a new 120 MMcf/d gas processing plant in the Gordondale area, about 100 kilometers (62 miles) northwest of Grande Prairie, AB. Encana said expects to extract an additional 3,000-4,000 b/d of NGLs from the Gordondale plant, which is expected to be in service in late 2012.
Step three is the newly announced expansion of Resthaven, where Encana has also secured capacity on a 44-kilometer (27 miles) six inch-diameter pipeline that Pembina plans to build to transport NGLs extracted at Resthaven to connect with its Peace Pipeline system for delivery to Edmonton, AB.
Pembina estimates that the Resthaven Facility, associated NGL pipeline and storage will cost about $230 million (net to Pembina). Pembina said it expects the new facilities to be in-service in late 2013. Pembina said its investment in Resthaven is supported by long-term firm service agreements with two of the major area producers, including Encana, while the NGL pipeline is underpinned by long-term firm service agreements with the Resthaven facility owners. Once the projects are completed, Pembina said it will own about 65% of the Resthaven facility and will own 100% of the NGL pipeline.
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