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Keyera targets to start up two Alberta condensate facilities in 2017: official

Canadian midstream player Keyera Energy will bring into service next year two additional condensate storage facilities at Fort Saskatchewan in Alberta to supply a growing demand in the province, a senior company official said Wednesday.

The planned facilities — which serve as Keyera’s growth-capital projects to support Alberta’s long-term infrastructure needs — is particularly targeted to serve an expected growth in oil sands production by 2018, Dean Setoguchi, senior vice president of the liquids business unit, said on an earnings call.

With a current output of about 2.3 million b/d, some 600,000 b/d of new oil sands production is due to come onstream in Alberta over the next two years, from primarily the Fort Hills project by Suncor that will produce 160,00 b/d, Surmont phase 2 (ConocoPhillips and Total E&P Canada, 150,000 b/d), Horizon expansion (Canadian Natural Resources, 125,000 b/d), Sunrise (Husky and BP, 60,000 b/d) and Christina Lake and Foster Creek (Cenovus and ConocoPhillips, 100,000 b/d).

“With a total gross condensate storage capacity of 12.5 million [barrels], we are positioning for growth,” he said. “In the last quarter, we continued washing filling the storage tanks] caverns 14 and 15 and also recently completed drilling the 16th cavern.”

Typically, the company builds storage tanks with capacity of 750,000 barrels, Keyera’s investor relations official Nick Kuzyk said separately.

Last quarter, Keyera also completed an expansion at its fractionation facility in Fort Saskatchewan that will allow the company to process an additional 35,000 b/d of NGL, CEO David Smith said on the same webcast.

“The expansion of our condensate storage and NGL fractionation facilities are underpinned by long-term, take-or-pay contracts,” Smith said, adding Keyera remains on track to spend nearly C$600 million ($460 million) by the end of 2016.

Besides the caverns and the NGL fractionation facilities, Keyera’s investments will also include construction of the Base Line storage terminal near Edmonton, also in Alberta, the Norlite pipeline project and the Grand Rapids pipeline, for which it has acquired access to 225,000 b/d of condensate transportation capacity between Edmonton and Fort Saskatchewan, Smith said.

“Those projects are tracking on schedule and within budget,” Smith said, noting the pipelines and the terminal facilities are due for completion by 2017/18.

The Base Line terminal, being is to be built under a 50:50 joint venture with Kinder Morgan, will initially have a capacity of 4.8 million barrels that can be extended to 6.6 million barrels at a later stage, while the Norlite pipeline will have a maximum capacity of 280,000 b/d and will serve the Fort Hills oil sands development.

Last quarter, Keyera’s gross liquids-rich gas processing throughput was 1.42 Bcf/d, compared with 1.43 Bcf/d in the same quarter the previous year. In the same comparable period, the company produced 137,000 b/d of NGL, compared with 141,000 b/d.

In September, Keyera plans a six-week turnround of its iso-octane facility in Alberta that will result in output being shut down in that period, Smith said.

With a nameplate capacity of 13,600 b/d, Keyera supplies nearly 90% of the product from that facility to refineries in the US, Kuzyk said.

The scheduled maintenance will cost about C$45 million, Smith said.

“In June, US gasoline production was the second highest on record, which has put downward pressure on gasoline prices and resulted in lower margins from the sale of iso-octane compared to a year ago. This trend is expected to continue into the second half of this year,” Smith said.

Source: Platts

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