SemCAMS Midstream and Keyera have formed asset joint venture to construct natural gas liquids (NGL) and condensate pipeline system in Canada with an investment of C$1.3bn ($965.8m).


Image: Illustrative Pipeline Route. Photo courtesy of Semgroup Corporation.

The pipeline will connect the liquids-rich Montney and Duvernay production areas of northwestern Alberta to the fractionation and condensate hubs in Fort Saskatchewan, Alberta.

Backed by long-term contracts with significant take-or-pay commitments, the pipeline system provides additional and alternative transportation solutions to deliver growing Montney and Duvernay production in northwestern Alberta to Fort Saskatchewan market.

The pipeline, which will be equally owned by SemCAMS and Keyera, will replace SemCAMS Midstream’s previously announced Montney to Market (M2M) pipeline.

SemCAMS Midstream president Dave Gosse said: “As Alberta’s low-cost natural gas plays continue to develop, customers are searching for competitive options to move NGLs and condensates from the production and processing areas in field locations to the Fort Saskatchewan market.

“Our well-capitalized and expanding midstream infrastructure platform makes SemCAMS Midstream the logical partner on this project, further advancing our Canadian growth strategy.”

Construction on the project is scheduled to commence in second half of 2020.

SemGroup CEO Carlin Conner said: “Together SemCAMS joint venture owners will utilize an optimal funding arrangement for all parties.

“The addition of this asset to SemCAMS’ growing midstream portfolio is critical to providing our customers the full suite of service offerings they desire.”

Planned to be commissioned in the first half of 2022, the project includes a 16-inch condensate pipeline and a 12-inch NGL pipeline.

The pipelines will be connected to third-party facilities as well as Keyera and SemCAMS Midstream-owned facilities.

KKR North American Infrastructure member and head Brandon Freiman said: “The combined midstream footprints of SemCAMS and Keyera along the route of the pipeline reinforces the strategic logic of this project for both parties.

“The project also aligns well with our investment thesis around building an integrated service provider in the high-growth Alberta Montney corridor.”

SemCAMS Midstream, which is a joint venture between SemGroup and KKR, expects the pipeline to further enhance its asset footprint and vertical integration.

By 2022, Keyera and SemCAMS will have nine operational gas plants in northwestern Alberta with access to approximately 2.25 billion cubic feet per day of natural gas processing capacity and 130,000 barrels per day of condensate handling facilities.