Mr. Scott Burrows reports
PEMBINA PIPELINE CORPORATION TO PROGRESS ENGINEERING AND BEGIN STAKEHOLDER CONSULTATION ON THE CORNERSTONE OIL SANDS PIPELINE PROJECT
Pembina Pipeline Corp. has
entered into an engineering support agreement for diluent and
blended bitumen transportation services associated with enhanced oil
recovery developments in northeast Alberta owned by KKD Oil Sands
Partnership. KOSP is a partnership between Statoil Canada Ltd., as managing partner, and PTTEP Canada Ltd.
Concurrent with the work under the ESA, Pembina and Statoil will proceed
with negotiations to conclude long-term agreements for the construction
of and transportation service on a new greenfield pipeline system and
associated infrastructure. The Cornerstone pipeline would transport diluent and blended
bitumen between KOSP's upstream developments and the Edmonton area,
including diluent connectivity at Pembina's Nexus terminal. PNT
interconnects Pembina's various terminalling infrastructure located in
the Edmonton, Redwater and Fort Saskatchewan areas. It provides
unparalleled access to the diverse crude oil grades produced in Western
Canada. In addition, it is connected to condensate grades transported
on third party and Pembina pipeline systems, including imported
pipeline supplies. The access and connectivity of PNT provides the
broadest array of diluent and diluent services available to Pembina's
oil sands customers.
"This marks an important step forward in Pembina's oil sands and heavy
oil transportation business," said Bob Michaleski, Pembina's chief
executive officer. "We continue to increase our access to diluent
sources, both in the Edmonton, Alta., area via our mid-stream business
and through expansions of our gas services assets and conventional
pipeline systems. This, combined with our ongoing major pipeline system
construction experience, puts us in a strong position to support KOSP's
oil sands development. The ESA allows us to lay the groundwork for a
substantial infrastructure expansion, which, should it proceed, will
provide Pembina with an exciting new oil sands platform that will
generate long-term shareholder value."
Under the ESA, Pembina and KOSP have jointly agreed to spend up to
approximately $35-million to conduct preliminary engineering work and
begin associated stakeholder consultation in support of KOSP's
transportation needs. At the conclusion of the work contemplated under
the ESA, Pembina expects to be in a position to file the necessary
applications to proceed with constructing the Cornerstone pipeline.
Subject to reaching commercial agreements, as well as obtaining
regulatory and environmental approvals thereafter, Pembina expects the
Cornerstone pipeline could be in service in mid-2017.
"Our preliminary capital cost estimate to undertake construction of a
320-kilometre 12-inch diluent and 24-inch blended bitumen pipeline system is
approximately $850-million," said Michael Hantzsch, vice-president, oil
sands and heavy oil. "This size of pipe would allow us to phase in
expansions down the road with incremental capital. We also may consider
upsizing the pipelines to 20 inches and 30 inches, respectively, should the work
conducted under the ESA indicate there are sufficient volumes."
The Cornerstone pipeline will be connected to KOSP's Cheecham terminal,
and Pembina Midstream Limited Partnership, a subsidiary of the
company, is expected to be a 50-per-cent shipper on the diluent pipeline
alongside KOSP. The shippers on the pipeline system will have exclusive
use of the terminal, enabling Pembina to offer additional value-added
third party services, including much needed new sources of condensate
and synthetic crude oil diluent for use by area producers, as well as a
number of options for blended product. PMLP will be working with
regional customers to develop and contract for terminalling services,
which will include diluent supply and blended bitumen transportation
out of the area.
We seek Safe Harbor.
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