Keyera acquires 50 per cent interest in section of Grand Rapids Pipeline
by Canadian Manufacturing.com Staff
Company will contribute about $140M to TransCanada's $3B project
CALGARY—Keyera has announced it will acquire a 50 per cent interest in the southernmost portion of the 20-inch diluent Grand Rapids Pipeline.
The 45-kilometre pipeline will be constructed by the Grand Rapids Pipeline Limited Partnership, an affiliate of TransCanada PipeLines and Brion Energy Corporation. The Pipeline will extend from Keyera’s Edmonton Terminal 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.
“As bitumen production continues to increase, so does demand for our industry-leading diluent handling services at the Edmonton/Fort Saskatchewan hub”, David Smith, Keyera’s president and CEO, said.
“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,” he added.
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 has been completed. The pipeline is expected to come into service in the second half of 2017.
Based on the current design, the pipeline should provide Keyera with proprietary access to at least 225,000 barrels per day of additional diluent transportation capacity between Edmonton and Fort Saskatchewan, the company said. It noted 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.
