Pembina, PIC makes FID to build Canada PDH/PP facility

Author: Tracy Dang

2019/02/04

HOUSTON (ICIS)--Pembina Pipeline and joint venture partner Petrochemical Industries of Kuwait (PIC) have made the financial investment decision (FID) to build a 550,000 tonne/year integrated propane dehydrogenation (PDH) and polypropylene (PP) facility in Alberta, Canada, the midstream company announced on Monday.

The 50:50 joint venture, Canada Kuwait Petrochemical Corp (CKPC), will own the Canadian dollar (C$)4.5bn ($3.4bn) facility, which is expected to start up in mid-2023.

Pembina will manage long-term propane supply and provide Alberta-specific operating and project execution experience, feedstock connectivity and producer relationships. PIC will provide PDH and PP project experience and global petrochemical marketing.

The PDH/PP facility will be located in Alberta’s Industrial Heartland and will consume 23,000 bbl/day of propane from the adjacent Pembina Redwater fractionation complex (RFS) and other regional fractionation facilities.

It use Honeywell’s C3 Oleflex process technology and Grace’s UNIPOL PP process technology.

“Sanctioning of the PDH/PP facility is the largest step taken to date by Pembina in executing its strategy to secure global market prices for customers’ hydrocarbons produced in western Canada, and provides another exciting platform for future growth,” said Mick Dilger, president and CEO at Pembina.

“Our investment in CKPC provides PIC an opportunity to build on our existing asset base in Alberta by developing large-scale petrochemical infrastructure with a highly strategic partner in a market with long-term feedstock security and a supportive local government,” said Mohammed Abdullatif Al-Farhoud, CEO at PIC.

The facility is expected to generate annual run-rate adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) of C$275m-350m, net to Pembina.

Pembina's net investment of C$2.5bn represents a 50% interest in CKPC and a 100% directly owned interest in the supporting facilities under an agreement between Pembina and CKPC.

($1 = C$1.31)

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