Canadian midstream operator Pembina Pipeline Corp will take a decision by the end of first quarter whether to carry out front-end engineering and design work for a petrochemical complex it plans to build in Alberta, a company official said Friday.
The timeline represents a delay of about three months, but is unlikely to impact the company's target of taking a final investment decision by Q2 2018, Pembina's senior vice president for NGL and natural gas, Stuart Taylor, said on an earnings webcast.
"We have completed a detailed technical, financial and commercial study for the planned PDH [propane dehydrogenation] and PP [polypropylene] project and were targeting a FEED decision by end 2016," he said.
"But we underestimated the amount of time it would take us to work with a technology provider and have now worked out an extra schedule [of three more months]," Taylor said, without identifying the technology provider.
Pembina, in a joint venture with Petrochemical Industries Company, is planning an integrated propylene and polypropylene facility to be located in Sturgeon County. The project is estimated to cost C$3.8 billion-C$4.2 billion ($2.9 billion-$3.2 billion), with construction due to start in 2019 and an in-service date of 2021.
The Alberta government extended a C$300 million credit to the JV in November, part of its plan to provide incentives for petrochemical investments in the province.
The project would utilize about 35,000 b/d of propane and produce up to 800,000 mt/year of polypropylene that would be transported in pellet form.
"We have been encouraged by the detailed feasibility study and although the FEED contract that could cost about C$100 million has been delayed a bit, it will be time well spent," Pembina CEO Mick Dilger said on the webcast.
North America would be the initial market for the project, Dilger said, adding the JV would also target international buyers.
Pembina has access to one of the largest supplies of feedstock propane in the Western Canadian Sedimentary Basin and in Q4 2016 had total NGL sales volume of 164,000 b/d, the company said Friday.
NEXT PHASES NEAR COMPLETION FOR PEACE PIPELINE, NGL FRACTIONATOR
To handle increased volumes of conventional crude oil in the WCSB, Pembina is targeting an in-service date of mid-2017 for the Phase III expansion of its Peace Pipeline, Dilger said.
"We are now in full construction mode, despite the severe winter, with over 3,000 people on site. Construction continues on the largest section of the project between Fox Creek and Namao in Alberta," Dilger said.
Phase III expansion of the 345-mile Peace Pipeline will have an initial capacity of 420,000 b/d and serve a spurt in drilling activities in liquids-rich plays in the WCSB to deliver more NGLs, condensate and conventional crude to Albertan markets in the Edmonton and Fort Saskatchewan areas.
Over 90% of work is also complete for the Phase III expansion of Pembina's Redwater NGL fractionation facility in Alberta, with targeted completion in early Q3, Dilger said.
Called RFS III, the facility will have capacity to handle and process 55,000 b/d and on completion will be the largest fractionation complex in Canada with a total capacity of 210,000 b/d, he said.
To handle a growing demand for NGL from oil sands producers and also an uptick in WCSB drilling activities, Pembina is keeping options for a Phase IV expansion of its Redwater facility, Dilger said.
"We re doing initial engineering work for Phase IV, but its doesn't mean as yet we will go ahead with it," he said, without indicating the timeline or capacity of the expansion.
