Pembina Pipeline Corporation and Petrochemical Industries Co. of Kuwait Establish Joint Venture and Proceed with Front End Engineering Design for Proposed 1.2 Billion Pound Per Year Integrated Polypropylene Facility
Pembina Pipeline Corporation ("Pembina" or "the Company") (TSX: PPL; NYSE: PBA) is pleased to announce that it, along with Petrochemical Industries Company K.S.C. ("PIC") of Kuwait, has reached key milestones for the previously announced proposed integrated propylene and polypropylene production facility in Sturgeon County, Alberta ("PDH/PP Facility" or the "Project"). Pembina and PIC have executed 50/50 joint venture agreements (the "Joint Venture") that includes binding commercial terms in support of the Project and have formed a new entity, Canada Kuwait Petrochemical Corporation ("CKPC"). Additionally, Pembina is pleased to announce that CKPC will proceed with activities for front end engineering design ("FEED") for the Project.
"The encouraging results of the recently completed feasibility study, the previously announced award of $300 million in royalty credits from the Alberta Government's Petrochemicals Diversification Program, and a Joint Venture with our world class partner, PIC, gives Pembina the confidence to further advance the Project," said Stuart Taylor, Pembina's Senior Vice President, NGL & Natural Gas Facilities. "This Project represents a material extension of our natural gas liquids value chain strategy and creates a significant incremental local market for western Canadian hydrocarbons."
"PIC is looking forward to progressing the development of this Project into FEED stage. Establishing a Joint Venture with Pembina and investing in a large-scale value-addition project will contribute to PIC's continued pursuit of sustainable and globally-diversified petrochemical growth," said Mrs. Hosnia Hashim, PIC's Deputy Chief Executive Officer, Olefins and Aromatics. "This Joint Venture between PIC and Pembina will be positioned to flourish in a competitive market with access to secure and advantaged feedstock. PIC welcomes the support of the local governments in this initiative and is looking forward to potentially expanding its asset base within Alberta."
"It's encouraging to see another milestone along the way on a project that will help diversify the type of energy products we produce here in Alberta," said Margaret McCuaig-Boyd, Alberta's Minister of Energy. "Our government is committed to creating good jobs in the industry through investments in world-class petrochemical facilities like this one."
The decision to proceed with FEED, execution of definitive Joint Venture agreements and the establishment of CKPC represent major milestones for Pembina and PIC. Deliverables of FEED include a refined capital cost estimate, a project execution plan, regulatory applications, an updated construction schedule and projected in-service date, among numerous other items. The anticipated cost of FEED is expected to represent approximately 2.0 percent to 2.5 percent of the Project's current cost estimate. FEED activities are expected to be completed by late 2018, followed by a final investment decision ("FID") from each partner.
The proposed PDH/PP Facility is expected to consume 22,000 barrels per day of Alberta-produced propane, which is expected to be sourced from Pembina's Redwater Fractionation Complex ("RFS"), as well as other regional facilities. The Project is anticipated to produce in excess of 1.2 billion pounds per year of polypropylene which would be transported to North American and global markets. Subject to required approvals and a positive FID, the Joint Venture expects to construct the PDH/PP Facility in close proximity to RFS in Sturgeon County, part of Alberta's Industrial Heartland. The preliminary capital cost estimate of the Project is $3.8 - $4.2 billion (gross).
Calgary-based Pembina Pipeline Corporation is a leading transportation and midstream service provider that has been serving North America's energy industry for over 60 years. Pembina owns and operates an integrated system of pipelines that transport various products derived from natural gas and hydrocarbon liquids produced primarily in western Canada. The Company also owns and operates gas gathering and processing facilities and an oil and natural gas liquids infrastructure and logistics business. Pembina's integrated assets and commercial operations along the majority of the hydrocarbon value chain allow it to offer a full spectrum of midstream and marketing services to the energy sector. Pembina is committed to working with its community and aboriginal neighbours, while providing value for investors in a safe, environmentally responsible manner. This balanced approach to operating ensures the trust Pembina builds among all of its stakeholders is sustainable over the long term. Pembina's common shares trade on the Toronto and New York stock exchanges under PPL and PBA, respectively. Pembina's preferred shares also trade on the Toronto stock exchange. For more information, visit www.pembina.com.
Petrochemical Industries Company K.S.C ("PIC") founded in 1963 is a subsidiary of Kuwait Petroleum Corporation ("KPC"). Today, PIC is a regional petrochemical industry leader. In addition to manufacturing and marketing fertilizers, olefins and aromatics in Kuwait, PIC participates in multiple joint ventures that also produce and market petrochemical products both locally and internationally. PIC has been operating in Alberta since 2004 through various investments including those in the petrochemical industry.
SOURCE: Pembina Pipeline Corporation
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