Calgary-based NOVA Chemicals Corp., which has been doing deals to ensure it has enough natural gas liquids (NGL) for its Canadian chemicals facilities, has secured a lease with midstream operator Provident Energy Ltd. for two underground NGL storage caverns now being developed.
Provident Energy Ltd., also based in Calgary, is developing the caverns and related infrastructure at its Redwater facility in the Fort Saskatchewan, AB, area. The total amount of storage to be leased under the long-term agreements is about 1 million bbl, with staged onstream dates in 3Q2012 and 1Q2013, Provident said. Both caverns and the associated facilities have been leased to NOVA on a cost-of-service basis.
“Our Redwater facility is a key growth platform for Provident,” said CEO Doug Haughey. “Our capital spending is focused on fee-for-service business like this.”
The total capital cost of the caverns and associated facilities is expected to be about C$100 million, a portion of which already is included in Provident’s expanded 2011 capital program. An estimated C$77 million remains to be spent in 2012, about half of which is incremental to Provident’s previously indicated future growth capital estimate of C$70 million per year. The two caverns are among several Provident plans to develop to meet “strong market demand for underground hydrocarbon storage in the greater Fort Saskatchewan area,” it said.
NOVA, a subsidiary of International Petroleum Investment Co. of Abu Dhabi in the United Arab Emirates, said at the end of June it would expand its proprietary polyethylene technology to serve North American markets under the “NOVA 2020” plan (see Daily GPI, June 30). Feasibility and engineering (FE) work now is under way to construct two polyethylene facilities in Alberta and Ontario; the FE studies are to be completed by mid-2012. NOVA had said in June that expansions also were being discussed at other Canadian facilities.
The FE studies are to determine whether to expand or build new ethylene crackers to take advantage of plentiful NGL production in North America’s shale plays. This year the chemicals company already has secured some major transactions to ensure it will have a long-term supply of ethane for its facilities.
In March Williams agreed to invest C$311 million to expand two of its Alberta facilities to support a long-term agreement with NOVA to produce up to 17,000 b/d of ethane and ethylene (see Daily GPI, March 29). In early May NOVA signed a memorandum of understanding (MOU) with a subsidiary of Range Resources Corp. for a long-term supply of ethane from the Marcellus Shale for its Corunna, ON, cracker. And a few weeks ago Statoil Marketing and Trading Inc. (SMT) agreed to supply NOVA with a long-term supply of ethane from the Marcellus Shale under another MOU (see Shale Daily, Aug. 2).
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