By Canadian Press

Peace Pipeline Expansion

Pembina announces resumption of Peace Pipeline expansion as part of 2021 spending plan

Dec 14, 2020 | 7:06 AM

CALGARY – Pembina Pipeline Corp. is planning $785 million in capital spending next year as it moves to restart work on two key projects.

The company says it will resume construction of the next phase of its Peace Pipeline expansion and go ahead with the restart of its Empress co-generation facility.

The pipeline expansion includes a new pipeline and associated infrastructure in the LaGlace-Valleyview-Fox Creek corridor.

The re-activation of Phase VII of the expansion project will include a new 20-inch pipeline and associated infrastructure along the corridor, which the company says is aimed at meeting transportation needs arising from the growth of condensate supply in the Western Canadian Sedimentary Basin.

“Pembina’s decision to re-commence construction of Phase VII was based on extensive discussions with its producing customers, validating long-term development plans and leading to a clear understanding and consensus regarding their need for future intra-basin transportation,” reads a statement from the company.”

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“These discussions confirmed both the need for, and the timing of, Phase VII. Additionally, these discussions confirmed that beyond 2021, there is growing customer demand for transportation services to support development of the Montney resource play, particularly within the liquids-rich LaGlace to Kakwa corridor and northeast British Columbia.”

Pembina adds in its report that it has received firm service commitments along the Peace Pipeline system, while also extending many contracts.

It says firm volume commitments will reach approximately one million bpd in 2023 and currently, the weighted average term of Peace and Northern pipeline contracts is approximately eight years.

“Further, Pembina has minimal contracts expiring on Peace Pipeline in 2021 and continues to progress the renewal of the legacy Phase I and II contracts, which have staggered expiries through to 2027.”

Pembina says the initial capacity has been reduced to 160,000 barrels per day from 240,000, however the capital cost estimate has also been revised lower, by approximately $175 million, to $775 million.

“Once Phase VII is complete, Pembina will have 1.1 million bpd of Edmonton area market delivery capacity across the Company’s Peace and Northern pipeline systems.

“Through the re-scoping of Phase VII, Pembina has maintained the ability to reach the previously envisioned ultimate capacity of the Peace system, and will pursue this through a more measured, capital efficient, economic and orderly expansion program focused on higher utilization rates, making the entire system even more competitive.”

The Empress co-generation facility in sotuhern Alberta will use natural gas to generate up to 45 megawatts of electrical power.

The project is expected to cost $120 million.

(With files from Shaun Penner / EverythingGP)