CALGARY—Pembina Pipeline Corp. says it will pay more than $550 million to buy natural gas processing assets from Paramount Resources.
The Musreau complex assets, some 15 kilometres from Pembina’s Cutbank complex near Grand Prairie, Alta., include Paramount’s recently constructed Kakwa sour natural gas processing complex and associated infrastructure, a sales gas pipeline and future disposal wells.
Pembina would also get Paramount’s preliminary engineering studies, licences and surface rights for the future construction of a sour natural gas processing plant known as the 6-18 facility.
Paramount, in addition to receiving $556 million in cash at closing, says it has also received a $35-million capital commitment for an enhancement program the company planned to complete this year at its Musreau complex.
Pembina said Thursday the deal would add 250 million cubic feet per day of processing capacity in one of its core areas. That would increase the total processing capacity of Pembina’s gas services business to more than 1.7 billion cubic feet per day when its Musreau III and the Resthaven expansions come on stream by mid-2016.
In conjunction with the transaction, the two companies have entered into a 20-year midstream services agreement, which includes a substantial take-or-pay commitment in support of the Kakwa assets. Pembina retains the right to contract spare capacity to third-parties.
“The acquisition of these assets strengthens Pembina’s strategic positioning in one of our core areas, supported by some of the most economic resource plays in North America,” Jaret Sprott, Pembina vice-president of gas services, said in a statement.
“Pembina looks forward to expanding on its long-term relationship with Paramount by broadening its service offering to include sour natural gas processing services in addition to liquids transportation and natural gas liquids fractionation services.”