Pembina Pipeline Corp. announced that due to high customer demand, it plans to expand its previously announced Phase III pipeline expansions by building a new 16-inch diameter pipeline from Fox Creek, Alberta, into Namao, Alberta, and a new 12-inch diameter pipeline from Wapiti, Alberta, into Kakwa, Alberta.

The 16-inch diameter pipeline will span about 270 kilometers (168 miles) and be built in the same right of way as the proposed 24-inch diameter pipeline from Fox Creek to Namao. The two pipelines are expected to have an initial combined capacity of 420,000 barrels per day (bbl/d), and an ultimate capacity of more than 680,000 bbl/d with the addition of midpoint pump stations. Since December, Pembina has secured an additional 59,000 bbl/d under contract. With these commitments, total volumes under contract are about 289,000 bbl/d, or 69% of the initial combined capacity.

The proposed Wapiti to Kakwa Pipeline is intended to debottleneck a portion of Pembina’s existing pipeline system. It will be about 43 miles long and is expected to have an initial capacity of about 95,000 bbl/d. This expansion will ultimately allow product to be delivered into Pembina’s core segment of the Phase III expansion between Fox Creek and Namao. Pembina also intends to build two new pump stations.

With the 16-inch diameter pipeline and the Wapiti to Kakwa Pipeline expansions in addition to its previously announced expansion, Pembina expects to incur extra capital expenditures of about CA$435 million (US$397 million), bringing total estimated capital for the Phase III expansion to US$2.23 billion.

“Pembina continues to see interest in the Phase III expansion, as evidenced by these new volumes,” said Paul Murphy, Pembina's senior vice president of pipeline and crude oil facilities. “We are in ongoing discussions with our customers to ensure their transportation needs are addressed as early on in the development of this expansion as possible. As a result of the pipelines approved today, we will be in a position to support their existing and future growth plans.”

Mick Dilger, Pembina’s president and CEO, added, “With the 16-inch diameter pipeline, Pembina will have four pipelines in the Fox Creek to Namao corridor with an ultimate capacity of over 1 million bbl/d. This will allow us to transport four distinct hydrocarbons—propane-plus, ethane-plus, condensate and crude oil—each in its own segregated pipeline. This is great for Pembina and for our customers as we will be able to realize operational efficiencies, such as minimizing or eliminating batch interface between the products and streamlining storage requirements. In addition, we will be able to provide a ratable flow of propane-plus and ethane-plus into industry fractionators, including our Redwater fractionator, which will help to optimize operations at these facilities.”

Subject to regulatory approval, Pembina expects the expansion to be in-service between late-2016 and mid-2017. Pembina submitted its regulatory application for both pipelines from Fox Creek to Namao on Sept. 2, 2014.