Calgary-based Keyera Corp. says it is proceeding with the development of the Key Access Pipeline System.
The $1.3-billion natural gas liquids and condensate pipeline system will transport Montney and Duvernay production in northwestern Alberta to Fort Saskatchewan.
The company says it has partnered with SemCAMS Midstream ULC, owned jointly by SemGroup Corp. and KKR, to develop the open-access system with initial connections into Keyera’s fractionation assets and condensate system in Fort Saskatchewan.
“This project is highly desired by industry as it provides an additional and alternative transportation solution to deliver production from Alberta’s liquids-rich developments to market. KAPS is expected to be operational in the first half of 2022 and provide Keyera with secure, long-term, take-or-pay revenues and strong project returns. The project is expected to generate an annual return on capital of between 10 per cent and 15 per cent starting in 2024,” says the company in a news release.
“KAPS is also an important link between Keyera’s growing gathering and processing franchise in northwestern Alberta and its strong liquids infrastructure network at Fort Saskatchewan, creating a platform for significant future opportunities.”
Keyera and SemCAMS Midstream ULC will develop the pipeline under a 50/50 joint venture agreement. Keyera and SemCAMS will have nine gas plants operating in northwestern Alberta by 2022 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. This new joint venture replaces the arrangement between Keyera and Wolf Midstream that was signed in late 2018, says the company.
“We are excited and pleased to develop this highly desired alternative transportation solution along with our partner SemCAMS Midstream,” says David Smith, Keyera’s president and CEO, in a statement. “We are confident in the outlook for this condensate rich region in northwestern Alberta and we thank our customers for their endorsement and commitment to our solution. Keyera is dedicated to developing this pipeline system in a responsible manner for all stakeholders.”
Mario Toneguzzi is a Troy Media business reporter based in Calgary.