Global Processing

New Alberta pipeline in the works

April 15, 2013
pipeline construction
The pipeline will span 354.18 miles, starting from the Gordondale area of northwestern Alberta and reaching the NGL energy hub in Fort Saskatchewan.

A new natural gas liquids (NGL) pipeline, known as the Western Reach Pipeline System, is to be set up in northwest Alberta, Canada, after an agreement was signed between Plains Midstream Canada and one of the country's biggest independent midstream operators, Keyera Corp.

Plains Midstream Canada, a subsidiary of Texas-based Plains All American Pipeline L.P., announced in a press release that both parties involved in the pipeline project have agreed on its construction but its cost will not be determined before completion of the engineering design and before a final decision on volumes has been reached. The project needs to be approved by regulators before moving on but it is expected that the pipeline will be operational by 2015.

Under the terms of the agreement, the pipeline will span 354.18 miles (570 kilometers), starting from the Gordondale area of northwestern Alberta and reaching the NGL energy hub in Fort Saskatchewan. It will pass through the Deep Basin area of Alberta, enabling Plains All American Pipeline to tap Canada's liquids-rich reserves, such as the Duvernay and Montney zones of western Canada. In fact, the project consists of two pipelines, each with a different purpose. The first one is set to transport NGL mix -- a mixture of butane, propane and condensate, whereas the second one will provide separate condensate services.

Having two separate pipelines will be beneficial to customers, as it will allow them to evade the pipeline operating costs in batch mode. It will also give customers the opportunity to choose where to direct their NGL mix and separated condensate among the range of fractionation, storage, pipeline and terminal facilities at the Fort Saskatchewan energy hub.

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Most of Canada's NGLs are aggregated for fractionation and are then delivered to the end-users from the Fort Saskatchewan area. Both Plains Midstream Canada and Keyera Corp already have a significant presence in the Fort Saskatchewan area but the implementation of this new pipeline will enable both companies to build on their presence in the region.

The latest move is a signal of Plains All American Pipeline's intention to enhance its presence in Canada. Last year the company took over BP Canada Energy Company, a subsidiary of BP plc. The country's rich natural gas deposits are yet to be fully developed and exploited but the development of the industry has been hindered by the lack of appropriate infrastructure. Canada needs pipelines that will not only facilitate transportation and delivery of NGL to untapped markets but could also encourage investments in the sector and creation of jobs that would contribute to the economy.

A decision on another major pipeline project is currently awaited but this time from U.S. authorities. The future of TransCanada's XL Keystone pipeline project depends on whether the Obama Administration will give it a go-ahead, amid climate change concerns and environmental protests. If approved, the pipeline will carry oil from Canada to U.S. Gulf Coast refineries.