CALGARY, May 29, 2018 /CNW/ - Keyera Corp. (TSX:KEY) ("Keyera") today announced it is proceeding with phase two of its Wapiti Gas Plant (the "Plant"), adding 150 million cubic feet per day of sour gas processing to the Plant, which is currently under construction south of Grande Prairie, Alberta. Based on current plans, construction of this second phase is expected to be completed in mid-2020 at an estimated cost of approximately $150 million.
In connection with construction of the second phase of the Plant, Keyera is also expanding the two gathering systems that will deliver volumes to the Plant. Additional compression will be added to both the Wapiti gathering system and the North Wapiti Pipeline System in order to meet the volume commitments of the two primary customers utilizing these systems. The expansion of the Wapiti gathering system is supported by Paramount Resources Ltd.'s ("Paramount") initial volume commitment on phase one of the Wapiti Gas Plant, while the expansion on the North Wapiti Pipeline System is supported by incremental volume commitments from Pipestone Oil Corp. ("Pipestone"). Additional capital investments in the Plant's gathering systems are covered under the existing agreements with Paramount and Pipestone, both of which include take-or-pay commitments.
Based on current estimates, the additional compression on the Wapiti gathering system is expected to cost approximately $85 million with a target completion date in mid-2020. Including this additional compression, the total cost of both phases of the Wapiti Gas Plant is now expected to be approximately $705 million. The additional compression on the North Wapiti Pipeline System is estimated to add approximately $40 million to the cost of that project, bringing the total to $160 million. Assuming timely receipt of all regulatory approvals and permits, the North Wapiti Pipeline System is expected to be completed in the second half of 2019.
As the majority of the spending for these three projects is expected to occur in 2019 and 2020, Keyera continues to expect to invest between $1.0 billion and $1.1 billion in growth capital in 2018 and is well positioned to fund its capital program.
"We are very pleased to be proceeding with these projects that continue to build Keyera's footprint in the liquids-rich Montney regions of northwestern Alberta," said David Smith, Keyera's President and Chief Executive Officer. "With the volume commitments we are seeing, it is evident that producers continue to have confidence in this region as one of the most economic developments in the Western Canada Sedimentary Basin. We look forward to working with all stakeholders to develop the Wapiti Gas Plant and its associated gathering systems in an environmentally and financially responsible manner."
Keyera Corp. (TSX:KEY) operates an integrated Canadian-based midstream business with extensive interconnected assets and depth of expertise in delivering midstream energy solutions. Its predominantly fee-for-service based business consists of natural gas gathering and processing, natural gas liquids processing, transportation, storage, marketing, iso-octane production and sales, and an industry-leading condensate system in the Edmonton/Fort Saskatchewan area of Alberta. Keyera strives to provide high quality, value-added services to its customers across North America and is committed to conducting its business ethically, safely and in an environmentally and financially responsible manner.
About Pipestone Oil Corp.
Pipestone Oil Corp. is a private oil and gas exploration and production company located in Calgary, Alberta. The Company has targeted the highly prospective condensate rich Montney formation located in the Pipestone area of Alberta. The Company is a wholly-owned subsidiary of Canadian Non-Operated Resources LP, a Calgary based oil and gas investment fund, which is run by a team of experienced operating, technical, and financial professionals at Grafton Asset Management Inc. Grafton Asset Management Inc. is a Calgary-based investment firm focused on investing across the capital structure of top-tier Canadian energy companies.
This news release contains forward-looking statements based on Keyera's current expectations and assumptions made by the management of Keyera relating to its business, the environment in which it operates, its future operations and the performance of its assets, including the proposed projects. As these forward-looking statements depend upon future events, actual outcomes may differ materially depending on factors such as: the accuracy of the construction schedule and cost estimates; producer interest in the services being offered; future operating results of the assets; the ability of Keyera to execute its strategic initiatives in connection with the projects; availability and cost of engineering resources, construction crews and materials; timely receipt of all necessary regulatory approvals or changes in requirements; changes in production decline rates; weather conditions; commodity supply/demand balances and prices; activities of producers, competitors, customers, business partners and others; overall economic conditions; access to capital and financing alternatives; operational risks associated with gas plant operation and oil and gas production; environmental liabilities; potential delays or changes in producer development plans in the area; the legislative, regulatory and tax environment; and other known or unknown factors. There can be no assurance that the results or developments anticipated by Keyera will be realized or that it will have the expected consequences for or effects on Keyera.
For additional information on these and other factors, see Keyera's public filings on www.sedar.com. The information provided in this release is given as of the date hereof. Readers are cautioned that they should not unduly rely on forward-looking information.
SOURCE Keyera Corp.
For further information: Please visit our website at www.keyera.com or contact Keyera Corp., Lavonne Zdunich, Director, Investor Relations, or Calvin Locke, Manager, Investor Relations, Email: [email protected]; Telephone: 403.205.7670 / Toll Free: 888.699.4853