Keyera Energy Plans to Spend $80 Million to Expand NGL Storage Capacity in Alberta

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Researched by Industrial Info Resources (Sugar Land, Texas)--Keyera Energy (Calgary, Alberta), a business unit of Keyera Facilities Income Fund (TSE:KEY.UN ) (Calgary), is planning to expand its NGL storage capacity at its Fort Saskatchewan NGL fractionator. The $80 million project will take the form of a four-year expansion program that will add four new salt dome storage caverns and one new brine pond.

Keyera Energy plans to add one new cavern with a storage capacity of 100,000 cubic meters each year over the next four years. Currently, Keyera Energy is drilling new wells for the first cavern. The cost of the first cavern is estimated at $18 million, and completion is expected in mid-2009. During 2009 Keyera Energy will construct a 500,000-cubic-meter brine pond and will install new pumps, brine lines and a flare system. Keyera Energy expects to award the engineering and construction contract for the surface facilities related to the new brine pond in late 2008.

When the four year plan is completed in 2012, a total of 3 million barrels of NGL storage capacity for condensate, butane, propane and other hydrocarbons will be added to the Fort Saskatchewan fractionator. Total NGL storage capacity at the Fort Saskatchewan fractionator will increase 37%.

Keyera Energy's storage project is designed to address the need for additional storage capacity over the next decade as oil sands development accelerates and the need for diluent continues to increase. There are early talks of extending the four-year plan into a 10-year plan that would involve the addition of six more storage caverns and another brine pond. As the production of bitumen sourced from the oil sands patch increases, so will the need for diluent.

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