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Plains All Pipeline in Canada - Analyst Blog
Plains All American Pipeline L.P.
) wholly owned subsidiary Plains Midstream Canada ULC has entered
into an agreement with Keyera Corp. to set up a liquids pipeline
system in northwest Alberta, Canada. The cost of this pipeline
project will be decided once volumes are confirmed and the
engineering design is finalized.
Per the contract, both the entities will have equal ownership rights in the pipeline. In this project, Plains All American Pipeline will provide construction as well as operational support.
The new pipeline will be known as the Western Reach Pipeline System. This 354.18-mile (570-kilometre) pipeline project is expected to stretch from the Gordondale area of northwestern Alberta to the natural gas liquids (NGL) energy hub in Fort Saskatchewan, Alberta. It consists of two new-constructed pipelines - one will employ for a mixture of butane, propane and condensate (NGL mix) and the second will offer separate condensate services.
Two different pipelines for the NGL mix and segregated condensate will help customers to evade the pipeline operating costs in batch mode. The customers will also have a choice to direct their NGL mix and separated condensate to a range of fractionation, storage, pipeline and terminal facilities at the Fort Saskatchewan energy hub.
The pipeline operators normally invest substantial amounts to set up new pipelines after getting long-term service assurance from the petroleum companies. These entities do the same and start an open season process for non-binding nominations for volumes to start construction. This project is expected to be online by the end of 2015, subject to regulatory approvals and completion of the open season.
Western Reach Pipeline will pass through the Deep Basin area of Alberta, and enable Plains All American Pipeline to tap Canada's prospective liquids-rich geological territories, including the Duvernay and Montney zones of western Canada.
It is evident from Plains All American Pipeline's recent organic as well as inorganic strategies that the partnership continues to strengthen its Canadian footprint. In 2012, the partnership acquired BP Canada Energy Company, a subsidiary of BP plc ( BP ).
Apart from Plains All American Pipeline, another pipeline major ONEOK Partners L.P. ( OKS ) recently completed its Bakken NGL pipeline to strengthen its presence in Canada. Bakken Shale is situated in Saskatchewan and Manitoba, Canada, and western North Dakota and eastern Montana in the U.S.
The majority of Canada's NGLs are aggregated for fractionation and consequent delivery to the end-users from the Fort Saskatchewan area. Both the entities have significant presence in the Fort Saskatchewan area. We believe that the installation of this new pipeline will enable both the entities to enhance their presence in the region.
Houston, Texas-based Plains All American Pipeline, L.P. is a publicly traded master limited partnership engaged in the transportation, storage, terminalling and marketing of crude oil, refined products and liquefied petroleum gas and other natural gas related petroleum products.
Plains All American Pipeline currently has a Zacks Rank #3 (Hold). Another stock from the industry that is presently performing better is Zacks Ranked #2 (Buy) Delek Logistics Partners LP ( DKL ).
BP PLC (BP): Free Stock Analysis Report
DELEK LOGISTICS (DKL): Free Stock Analysis Report
ONEOK PARTNERS (OKS): Free Stock Analysis Report
PLAINS ALL AMER (PAA): Free Stock Analysis Report
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