Pipes of Peace - Pembina's Plan to Move More Condensate Out of the Montney

As Western Canadian natural gas production has been recovering off lows from a few years ago and pushing higher, one of the by-products of this recovery has been steadily rising production of natural gasoline, an NGL “purity product’ also known as plant condensate. Condensate production has been growing so much that Pembina Pipeline Corp. — a leading transporter of natural gasoline in the region — has been undertaking another round of expansions to its Peace Pipeline system to move more of the product to the Alberta oil sands. There, condensate is used as a diluent to allow the transportation of viscous bitumen to far-away markets via pipelines or rail. Today, we take a closer look at Pembina’s effort to expand the Peace Pipeline.

Pembina Pipeline Corp. is a major midstream player in the Canadian oil and gas sector. The company owns and operates extensive pipeline networks across Western Canada (primarily in Alberta and British Columbia) that transport crude oil, NGLs (including natural gasoline/condensate) and natural gas to downstream users, as well as to storage, terminals, fractionation facilities, and wholesale marketing and refining operations. Pembina is also involved with Canada Kuwait Petrochemical Corp. in the development of a PDH/PP (propane de-hydrogenation/polypropylene) plant now under construction at its Redwater complex just outside of Edmonton, AB. (We discussed the PDH/PP plant recently in Things Can Only Get Better).

It’s been almost five years since we last specifically discussed Pembina’s condensate transportation system (see Parallel Lines) and the development of its Canadian Diluent Hub for the distribution of condensate as diluent for use in the oil sands. Our focus in today’s blog is to catch up with the expansions since then and highlight pending expansions to Pembina’s Peace Pipeline system (gray lines in Figure 1), a major transporter of crude oil and NGLs along the western foothills and mountainous regions of Alberta and northeastern British Columbia (BC). Although the original Peace Pipeline — named for the Peace River region of Alberta — was initially developed in the 1950s to transport primarily crude oil, it has been expanded over the years to become a major transporter of hydrocarbon liquids, including NGLs. The system has seen its most significant growth in recent years, especially for the transportation of condensate. This has become a major focus for Pembina given that the aforementioned recovery in natural gas production has been accompanied by commensurate growth in condensate production from the liquids-rich plays of the Montney, Duvernay and other formations along the Alberta-BC border.

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