Parallel Lines - The Diluent Trail Across Canada Part 4 – Pembina’s Canadian Diluent Hub

Current analysis of how Western Canadian producers can find supplies to meet a growing need for diluent material to blend with their heavy crude and bitumen suggest that up to 485 Mb/d of imports will be needed by 2019. But there is a growing belief that increased production of condensate from the Montney and Duvernay shale plays in Western Alberta and British Columbia will supply far more diluent than previously expected – reducing that import requirement significantly. Today we look at plans by Pembina to ship increased diluent supplies to Edmonton from domestic Canadian sources.

This series details infrastructure delivering increasing quantities of diluent to production locations in Western Canada. The first episode (see The Diluent Trail Across Canada – Introduction) provided an overview of current and expected demand for diluent range materials for use by oil producers in the Western Canadian Sedimentary Basin (WCSB). Total Canadian demand for diluent in 2014 is expected to average 380 Mb/d – meaning that with 160 Mb/d of local supply about 220 Mb/d will be imported – mostly from the U.S. By 2019 total Canadian diluent demand is expected to increase to 685 Mb/d and unless local supplies increase (the topic of today’s episode) higher volumes of diluent imports into Canada will be needed. Episode Two covered the Southern Lights and Cochin pipeline diluent routes from the U.S. to Western Canada that deliver the majority of those imported supplies today. In Episode 3 we looked at the diluent distribution network in the two Edmonton hubs of Sherwood Park and Fort Saskatchewan, operated by Enbridge and Keyera respectively. Diluent distributed through pipelines and storage in these two hubs is comingled and has to meet the Enbridge CRW specification. In this episode we look at plans by midstream pipeline company Pembina to build a Canadian Diluent hub at Fort Saskatchewan fed by their Redwater natural gas liquids (NGL) fractionation facility as well as a network of pipelines delivering light hydrocarbons from Alberta and British Columbia.

N E W   R E P O R T ! !   Battle for Henry Hub

Examines the impact of huge surpluses of natural gas bearing down on the Henry Hub in South Louisiana from Marcellus/Utica in the east and supplies from the west sourced from high-BTU and associated gas from plays in TX, NM, OK and ND

More information about Battle for Henry Hub here.

Calgary based Pembina Pipeline Corporation owns and operates pipelines transporting crude and natural gas liquids (NGLs) including condensate from across Alberta and British Columbia into the Enbridge region. Pembina also gather and process natural gas and NGLs. The company operates an NGL fractionation plant at Redwater in Fort Saskatchewan, close to the large Heartland energy infrastructure hub that we described in Episode 3 as well as a terminal closer to Edmonton at Sherwood Park. The Pembina pipeline network includes the Peace and Northern systems that transport conventional crude production, condensates and NGLs into the Edmonton region. Pembina also operate the Alberta Oil Sands (AOSPL) and Horizon pipelines that transport synthetic crude oil (SCO) from upgrader plants in the oil sands region to the north to delivery points in Edmonton as well as the Nipisi oil and Mitsue diluent pipelines that together facilitiat the movement of heavy oil from Pelican Lake and Peace River.

Pembina currently supplies condensate to three diluent pipeline systems via their Redwater terminal - the Interpipeline Cold Lake pipeline, the Enlink Midstream/MEG 50/50 JV Access pipeline and the Fort Saskatchewan pipeline system (FSPL).  The diluent Pembina currently supply via Redwater is a mixture of plant condensate (a.k.a, natural gasoline) from their NGL fractionation facility and condensate delivered by rail to a 20 Mb/d rail load/unload facility at Redwater. Further south, Pembina also deliver lease condensate from their Peace Valley and Drayton pipeline gathering systems into their Edmonton terminal – part of the Enbridge CRW condensate network that we described in the previous episode. That terminal delivers condensate to Kinder Morgan’s North 40 Terminal and the Enbridge Edmonton terminal.

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