Pembina Pipeline Corporation announced that it has entered into agreements to expand the Vantage pipeline system for an estimated capital cost of USD 85M.
The Vantage Expansion entails increasing Vantage’s mainline capacity from 40,000 barrels per day (bpd) to approximately 68,000bpd through the addition of mainline pump stations and the construction of a new 80km, 8″ gathering lateral.
The Vantage mainline expansion is supported by a long-term, fee-for-service agreement, with a substantial take-or-pay component, and the gathering lateral is underpinned by a fixed return on invested capital agreement. Subject to regulatory and environmental approvals, the Vantage Expansion is expected to be in-service in early 2016. Once the Vantage Expansion is in-service, Pembina expects that the overall system, including base capacity, expansion capacity and volumes from the company’s Saskatchewan Ethane Extraction Plant will result in an EBITDA range of USD 75M to USD 110M per year, with the base of the range representing consolidated take-or-pay volumes.
“This expansion has been a priority for us since acquiring Vantage in September 2014, and we are very pleased to see it come to fruition,” said Mick Dilger, Pembina’s president and CEO. “It supports our strategy to grow our fee-for-service-based cash flow stream, improves the accretion of the Vantage acquisition and will provide long-term shareholder value.”