Pembina Reactivates Peace Pipeline Expansion, Suspends Joint Petrochemical Project

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Researched by Industrial Info Resources (Sugar Land, Texas)--Pembina Pipeline Corporation (NYSE:PBA) (Calgary, Alberta) recently announced planned 2021 capital expenditures worth C$785 million (US$618 million) as part of its guidance for the year. Pembina is looking to growth projects, in particular a reactivation of its Peace Pipeline expansion, although it has suspended a major joint-venture petrochemical project in Alberta. Industrial Info is tracking US$10.77 billion in active projects belonging to Pembina.

Click on the image at right for a graph showing Pembina Pipeline Corporation's project activity, by industry.

Pembina deferred construction of a Phase VII expansion of its Peace Pipeline in Alberta's Deep Basin and Montney Shale, which will run from LaGlace to Edmonton, in March, due to a steep decline in crude oil prices and battered demand caused by COVID-19. But physical throughput and production continues to recover, and Pembina has decided to reactivate the project. Construction of the expansion, which originally was planned to kick off in December, is now planned for June 2021. The 136-mile pipeline is expected to transport crude and condensate in the LaGlace-Valleyview-Fox Creek corridor.

"Pembina has maintained the ability to reach the previously envisioned ultimate capacity of the Peace system, and will pursue this through a more measured, capital-efficient, economic and orderly expansion program focused on higher utilization rates, making the entire system even more competitive," the company said in a press release.

The Phase VIII and IX expansions remain deferred; however, the initial contracts are still in place, and Pembina expects to make a decision in 2021 whether to revive the projects. For more information, see Industrial Info's reports on the VII, VIII and IX expansion projects.

The midstream provider's 2021 guidance highlighted an additional growth project, which is scheduled for completion in the first quarter. A grassroot export terminal in Prince Rupert, British Columbia, will feature a 25,000-barrel-per-day capacity of liquid propane, to be stored in above-ground refrigerated tanks, for export to global markets. The propane will be sourced primarily from Pembina's Redwater fractionation complex. Construction kicked off in October 2019. For more information, see Industrial Info's reports on the Prince Rupert project and Redwater complex.

However, after the COVID-19 outbreak, Pembina invoked force majeure on one of its major projects on the horizon. Now the company has indefinitely suspended its grassroot propane dehydrogenation (PDH) and polypropylene (PP) production facility project in Redwater, Alberta, citing significant risks, in particular lump-sum contract costs for construction of the PDH plant. The project is a joint venture with Kuwait's Petrochemicals Industries Company's Canada Kuwait Petrochemical Corporation. For more information, see Industrial Info's project reports on the PDH and PP plants.

For more information, see February 5, 2019, article - Pembina Makes Positive Final Investment Decision for Propane Dehydrogenation and Polypropylene Complex.

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