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Released June 02, 2021 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--As oil and gas demand rebounds across North America, midstream giants like Pembina Pipeline (NYSE:PBA) (Calgary, Alberta) are buying out many of their smaller rivals, which typically had less cash and fewer assets on hand to carry them through the pandemic. Pembina announced this week it expects to acquire all of the issued and outstanding shares of Inter Pipeline Limited (TSX:IPL) (Calgary), a nearly 25-year-old company that had been left wounded by the pandemic fallout. Industrial Info is tracking nearly $2.5 billion in active projects from Pembina and more than $4.3 billion worth from Inter Pipeline.
Click on the image at right for a graph detailing Inter Pipeline's active projects, by industry sector.
The deal will create one of the largest energy-infrastructure companies in Canada. Inter Pipeline's decision to sell was spurred largely by cost overruns and construction delays at one of its most ambitious projects in decades: the Heartland Petrochemical Complex in Fort Saskatchewan, Alberta, which would be its first petrochemical project. Setbacks related to the COVID-19 pandemic only added to these problems, leaving Inter Pipeline vulnerable to a hostile takeover bid earlier this year from investment firm Brookfield Infrastructure Partners (NYSE:BIP) (Toronto, Ontario), according to Reuters. Inter Pipeline fended off the takeover, but it has been offering partnerships to other companies in hopes of alleviating its debts.
Construction is ongoing for key parts of the Heartland complex. The roughly $1.77 billion Heartland propane dehydrogenation (PDH) plant, which is designed to produce 1.1 billion pounds per year of propylene from 22,000 barrels per day (BBL/d) of propane feedstock, began in early 2018 and is expected to wrap up in the third quarter. Construction on a $1.3 billion polypropylene unit, which is designed to produce 1 billion pounds per year, began in fourth-quarter 2018 and is expected to wrap up in first-quarter 2022; and construction on a $453.4 million gas-fired power plant, which includes a central utilities block, substation and distribution system to provide the new units with 102 megawatts (MW), kicked off in fourth-quarter 2019 and is expected to wrap up in first-quarter 2023.
Subscribers to Industrial Info's Global Market Intelligence (GMI) Chemical Processing Project Database can read detailed project reports on the PDH unit, polypropylene unit and gas-fired power plant.
Inter Pipeline announced in April it had secured take-or-pay agreements with "seven counterparties, including Canadian and multinational energy producers and North American polypropylene consumers," for 60% of Heartland's polypropylene production capacity. Inter Pipeline's goal is to secure at least 70% of Heartland's production under long-term, take-or-pay agreements. In the same month, the project benefited from a C$408 million (US$325 million) grant from the province of Alberta, which is seeking to expand its role in petrochemical production. For more information, see April 7, 2021, article - Alberta Issues Incentives Grant for Petrochemical Project Development.
Pembina's acquisition of Inter Pipeline is expected to close in the fourth quarter of 2021, pending regulatory and other approvals.
Inter Pipeline also is weighing its options for a continued expansion of the Central Alberta Pipeline System, following a two-phase expansion that was completed last year. The proposed phase would add oil to the mainline from a pump station in Stettler, a town roughly halfway between Edmonton and Calgary. Subscribers can learn more in Industrial Info's project report.
Pembina, for its part, is looking to reactivate several major expansions it deferred amid the pandemic. In January, the company announced it had included the Phase VII expansion of its Peace Pipeline in Alberta's Deep Basin and Montney Shale, which it effectively halted in March 2020, in its 2021 capital-spending budget. Executives also expect to announce their plans for Phase VIII and Phase IX by the second half of the year, as well as a proposed expansion of the Prince Rupert Terminal in British Columbia, Pembina's first propane marine export facility, which began operations in April.
"On the labor side, we're seeing, frankly, a really positive trend [on Phase VII] from our end," said Harry Andersen, Pembina's chief operational officer for pipelines, in a quarterly earnings-related conference call. "We have our contracts in place with two mainline contractors on the two spreads, per se Phase VII. We've seen really directionally good pricing on both the mainline contracting and the [horizontal directional drilling]." Subscribers can learn more details, including projected capacities and investment values, in Industrial Info's project reports for Phase VII, Phase VIII, Phase IX and the Prince Rupert expansion.
"The government of Alberta's continued and increasing support and commitments related to the petrochemical industry, including various incentive programs, are expected to drive higher ethane, propane and butane demand in western Canada," said Mick Dilger, the chief executive officer of Pembina, in the earnings call. He added: "We continue to look at 2021 as a turnaround year, with Pembina returning to its traditional growth trajectory by 2022."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
Click on the image at right for a graph detailing Inter Pipeline's active projects, by industry sector.The deal will create one of the largest energy-infrastructure companies in Canada. Inter Pipeline's decision to sell was spurred largely by cost overruns and construction delays at one of its most ambitious projects in decades: the Heartland Petrochemical Complex in Fort Saskatchewan, Alberta, which would be its first petrochemical project. Setbacks related to the COVID-19 pandemic only added to these problems, leaving Inter Pipeline vulnerable to a hostile takeover bid earlier this year from investment firm Brookfield Infrastructure Partners (NYSE:BIP) (Toronto, Ontario), according to Reuters. Inter Pipeline fended off the takeover, but it has been offering partnerships to other companies in hopes of alleviating its debts.
Construction is ongoing for key parts of the Heartland complex. The roughly $1.77 billion Heartland propane dehydrogenation (PDH) plant, which is designed to produce 1.1 billion pounds per year of propylene from 22,000 barrels per day (BBL/d) of propane feedstock, began in early 2018 and is expected to wrap up in the third quarter. Construction on a $1.3 billion polypropylene unit, which is designed to produce 1 billion pounds per year, began in fourth-quarter 2018 and is expected to wrap up in first-quarter 2022; and construction on a $453.4 million gas-fired power plant, which includes a central utilities block, substation and distribution system to provide the new units with 102 megawatts (MW), kicked off in fourth-quarter 2019 and is expected to wrap up in first-quarter 2023.
Subscribers to Industrial Info's Global Market Intelligence (GMI) Chemical Processing Project Database can read detailed project reports on the PDH unit, polypropylene unit and gas-fired power plant.
Inter Pipeline announced in April it had secured take-or-pay agreements with "seven counterparties, including Canadian and multinational energy producers and North American polypropylene consumers," for 60% of Heartland's polypropylene production capacity. Inter Pipeline's goal is to secure at least 70% of Heartland's production under long-term, take-or-pay agreements. In the same month, the project benefited from a C$408 million (US$325 million) grant from the province of Alberta, which is seeking to expand its role in petrochemical production. For more information, see April 7, 2021, article - Alberta Issues Incentives Grant for Petrochemical Project Development.
Pembina's acquisition of Inter Pipeline is expected to close in the fourth quarter of 2021, pending regulatory and other approvals.
Inter Pipeline also is weighing its options for a continued expansion of the Central Alberta Pipeline System, following a two-phase expansion that was completed last year. The proposed phase would add oil to the mainline from a pump station in Stettler, a town roughly halfway between Edmonton and Calgary. Subscribers can learn more in Industrial Info's project report.
Pembina, for its part, is looking to reactivate several major expansions it deferred amid the pandemic. In January, the company announced it had included the Phase VII expansion of its Peace Pipeline in Alberta's Deep Basin and Montney Shale, which it effectively halted in March 2020, in its 2021 capital-spending budget. Executives also expect to announce their plans for Phase VIII and Phase IX by the second half of the year, as well as a proposed expansion of the Prince Rupert Terminal in British Columbia, Pembina's first propane marine export facility, which began operations in April.
"On the labor side, we're seeing, frankly, a really positive trend [on Phase VII] from our end," said Harry Andersen, Pembina's chief operational officer for pipelines, in a quarterly earnings-related conference call. "We have our contracts in place with two mainline contractors on the two spreads, per se Phase VII. We've seen really directionally good pricing on both the mainline contracting and the [horizontal directional drilling]." Subscribers can learn more details, including projected capacities and investment values, in Industrial Info's project reports for Phase VII, Phase VIII, Phase IX and the Prince Rupert expansion.
"The government of Alberta's continued and increasing support and commitments related to the petrochemical industry, including various incentive programs, are expected to drive higher ethane, propane and butane demand in western Canada," said Mick Dilger, the chief executive officer of Pembina, in the earnings call. He added: "We continue to look at 2021 as a turnaround year, with Pembina returning to its traditional growth trajectory by 2022."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
