TORONTO (ICIS)--The proposed combination of Canadian midstream energy firms Pembina Pipeline and Inter Pipeline (IPL) could lead to a second propane dehydrogenation/polypropylene (PDH/PP) production complex in Alberta province, officials said.
IPL has a PDH/PP project, known as the “Heartland Petrochemical Complex” (HPC), due to start up next year.
Plans for a similar project by Pembina and Kuwait Petrochemical Industries (KPI), which have been suspended indefinitely, may now be revived if the Pembina-IPL combination goes through.
In an update on Monday, Pembina said its
combination with IPL would
- eliminate the long-term propane supply risk for HPC,
- while "further improving the possibility of a second such facility".
Globally, petrochemical infrastructure tends to cluster with multiple facilities taking advantage of shared infrastructure and feedstock, Pembina said.
With this in mind, Pembina has undertaken a preliminary evaluation of the synergies that may be available to the combined entity through the development of a second facility.
The synergies could come to Canadian dollar (C$) 200m ($164m) of capital cost savings and about C$100m of annual operating, general and administrative expense savings - compared with building a single stand-alone facility, Pembina said.
In addition, Pembina and Kuwait Petrochemical Industries have “safeguarded a C$400m investment” in their previous project, including finishing several long-lead equipment orders that remain in storage, Pembina said.
“Pembina will continue to carefully consider possible next steps to progress further petrochemical infrastructure opportunities,” it added.
Pembina noted a number of other project opportunities that could come with its combination with IPL, including:
Cochrane Straddle Plant – Connecting IPL's Cochrane straddle plant to Pembina's Brazeau natural gas liquids (NGL) pipeline system would enable propane-plus liquids streams to be transported and processed with Pembina infrastructure, and ultimately be available to connect to Inter Pipeline's HPC.
Butane Splitter – The combined Pembina-IPL would provide “a critical scale supply” of butane to support the development of a butane splitter in Fort Saskatchewan. Front end engineering and design (FEED) of the butane splitter project is nearing completion.
Alkylation Facility – An alkylation facility downstream of the butane splitter in Fort Saskatchewan, capable of producing high-octane gasoline blend stock using alky feed from IPL's Redwater facility. The project is at the pre-FEED stage with a preliminary capital investment estimate of C$400m.
Pembina and IPL agreed on 1 June that Pembina would acquire IPL, creating an energy infrastructure and petrochemicals firm with a pro forma enterprise value of C$53bn.
The agreement came as IPL is facing a hostile takeover bid by Brookfield Infrastructure Partners.
Key operational metrics for the
combined Pembina-IPL entity:
(boe = barrels of oil equivalent; Bcf = billion cubic feet)
|Pembina||Inter Pipeline||Pro Forma|
|Pipeline Capacity||3.1m boe/day||3.1m boe/day||6.2m boe/day|
|Processing Capacity||6.1 Bcf/day||2.7 Bcf/day||8.8 Bcf/day|
|Fractionation Capacity||350,000 bbl/day||40,000 bbl/day||390,000 bbl/day|
|Storage Capacity (excluding Europe)||32m bbl||6m bbl||38m bbl|
|PP capacity (startup in 2022)||-||-||525,000 tonnes/year|
($1 = C$1.22)
Thumbnail photo: Inter Pipeline’s PDH/PP complex, under construction in Canada’s Alberta province. Source: Inter Pipeline