CALGARY, Aug. 6, 2015 /CNW/ – Keyera Corp. (TSX:KEY) (“Keyera”) today announced that it has agreed to acquire a 50% interest in the southernmost portion of the 20-inch diluent Grand Rapids Pipeline (the “Pipeline”). The 45-kilometre (28 mile) pipeline will be constructed by Grand Rapids Pipeline Limited Partnership (“Grand Rapids”), an affiliate of TransCanada PipeLines Limited (“TransCanada”) and Brion Energy Corporation. The Pipeline will extend from Keyera’s Edmonton Terminal (“KET”) to TransCanada’s Heartland Terminal near Fort Saskatchewan as part of TransCanada’s previously announced Grand Rapids Pipeline project. In connection with this agreement, Keyera will be constructing a pump station at KET where the Pipeline will connect.
Under a 50-50 joint venture agreement, once the Pipeline has been completed Grand Rapids will contribute it to the joint venture and Keyera will contribute the new pump station at KET. Based on current estimates, Keyera expects its total contribution to the joint venture will be approximately $140 million. Keyera will be operator of the Pipeline and the KET pump station once construction is complete and the assets are in service. The expected in-service date is in the second half of 2017, assuming the current schedule is maintained.
Based on the current design, the Pipeline is expected to provide Keyera with proprietary access to at least 225,000 net barrels per day of additional diluent transportation capacity between Edmonton and Fort Saskatchewan. A portion of this capacity will be used to meet Keyera’s commitments under existing agreements with customers for diluent transportation, which total at least 485,000 barrels per day by 2019. The remaining capacity will be available for new diluent transportation business. Keyera also plans to add connectivity between its existing Fort Saskatchewan Condensate System and the Pipeline. Based on preliminary engineering, the connection costs are expected to range between $40 million and $60 million.
“As bitumen production continues to increase, so does demand for our industry-leading diluent handling services at theEdmonton/Fort Saskatchewan hub”, said David Smith, Keyera’s President and Chief Executive Officer. “We currently provide customers with the most complete diluent network in the industry, offering access to the most receipt and delivery connections, as well as storage options. This Pipeline further enhances our diluent handling services by adding another connection point, increasing our pipeline capacity and improving the flexibility and reliability of our system. Keyera values the opportunity to enter into this joint venture with Grand Rapids, which is yet another strong industry partnership providing critical infrastructure for oil sands producers.”
Keyera Corp. (TSX:KEY) operates one of the largest natural gas midstream businesses in Canada. Its business consists of natural gas gathering and processing as well as the processing, transportation, storage and marketing of NGLs, the production of iso-octane and crude oil midstream activities.
Keyera’s gas processing plants and associated facilities are strategically located in the west central, foothills and deep basin natural gas production areas of the Western Canada Sedimentary Basin. Its NGL and crude oil infrastructure, including pipelines, terminals and processing and storage facilities, as well as its iso-octane facility, are located in Edmonton and Fort Saskatchewan, Alberta, a major North American NGL hub. Keyera markets propane, butane, condensate and iso-octane to customers in Canada and the United States.
This document contains forward-looking statements based on current expectations and assumptions made by the management of Keyera respectively relating to, among other things, each party’s business, the environment in which each operates and the future operations and performance of the assets. As these forward-looking statements depend upon future events, actual outcomes may differ materially depending on factors such as: obtaining all necessary governmental and regulatory approvals for South Grand Rapids, the proposed connections and the associated facilities; successful construction of the Pipeline by Grand Rapids and the pump station at KET by Keyera; future operating results of the assets, including anticipated demand for diluent handling services under existing and future contracts; ability to execute strategic initiatives; construction and input costs; weather conditions; construction scheduling variables; commodity supply/demand balances and prices; activities of producers, competitors, customers, business partners and others; overall economic conditions; access to capital and financing alternatives; operational risks; and potential delays or changes in plans with respect to development projects or capital expenditures or the results therefrom; the legislative, regulatory and tax environment; and other known or unknown factors. There can be no assurance that the results or developments anticipated by either Keyera will be realized or that they will have the expected consequences for or effects on Keyera.
For additional information on these and other factors, see Keyera’s public filings on www.sedar.com. The information provided in this release is given as of the date hereof. Readers are cautioned that they should not unduly rely on forward-looking information.
SOURCE Keyera Corp.