Pembina Announces Long-Term Agreements for Storage and Additional Infrastructure Expansions to Support Further Development at Re

abarrelfullabarrelfull wrote on 05 Aug 2013 13:21
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Pembina Pipeline Corporation ("Pembina" or the "Company") (TSX: PPL; NYSE: PBA) announced today that it has entered into long-term cost-of-service agreements with NOVA Chemicals Corporation ("NOVA") for the use of an underground storage cavern currently in development at Pembina's Redwater fractionation and storage site ("Redwater"), along with associated infrastructure. In addition, Pembina plans to spend approximately $25 million to upsize certain facilities associated with its second fractionator ("RFS II") to accommodate the future development of a third fractionator ("RFS III") at Redwater.

Long-term Storage Agreements

"We are excited to continue our relationship with NOVA by providing them with additional storage solutions," said Bob Lock, Pembina's Vice President, NGL Midstream. "These arrangements represent another example of the Company's ability to leverage our land and infrastructure at Redwater and grow the contracted, fee-for-service component of our business."

The cavern will provide approximately 500,000 barrels of storage, with an expected on-stream date in mid-to-late 2015. Pembina expects the total capital cost of the cavern and associated infrastructure to be approximately $40 million.

Pembina's cavern development program at Redwater is a key part of the Company's growth strategy in the greater Fort Saskatchewan, Alberta area.

Development at Redwater

As fractionation capacity in the Western Canadian Sedimentary Basin ("WCSB") is forecasted to remain tight in the coming years, Pembina is continuing to develop its Redwater site with both the construction of RFS II and today's announcement around the expansion of certain associated facilities to accommodate the future development of RFS III. The pre-development work for RFS III is estimated to cost approximately $25 million.

"Currently, RFS III is in the preliminary engineering phase and we have not yet entered into commercial agreements," said Mr. Lock. "However, with the high level of activity in the WCSB, we are confident there is strong market demand to support a third fractionator at our site. With this in mind, we are taking the opportunity while constructing RFS II to cost-effectively expand site infrastructure to accommodate further expansion. RFS III would provide our customers with timely fractionation capacity along with efficient storage and market access through our well-established facilities at Redwater."

Pembina's existing ethane-plus fractionator at Redwater, RFS I, has an operating capacity of 73,000 barrels per day ("bpd"). With the addition of RFS II, which is expected to come into service in the fourth quarter of 2015, the Company's ethane-plus fractionation capacity will double to 146,000 bpd. Should RFS III proceed, the facility would further leverage engineering and design work completed for RFS I and RFS II.

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