Encana Corporation has reached an agreement that will see Pembina Pipeline Corporation invest about C$230 million to expand the processing and liquids extraction capacity of the Resthaven natural gas processing plant in west central Alberta. This plant capacity increase, the first of a two-phase expansion, is scheduled to come on stream in late 2013. With this initial expansion, Encana expects to boost its extraction of natural gas liquids (NGLs) at Resthaven from about 1,000 barrels per day to about 8,000 barrels per day. The second expansion is expected to provide Encana with another 4,000 barrels per day of extracted NGLs from its growing liquids-rich natural gas production in the region.

"This is the third step in our well-developed plans to capture additional value from our liquids-rich natural gas production in Alberta's Deep Basin. Over the next number of years, we expect our NGLs extraction to triple from about 10,000 barrels per day to about 30,000 barrels per day following investment by industry-leading third-party midstream companies at three Alberta Deep Basin plants: Resthaven - about 12,000 barrels per day, Musreau - about 5,000 barrels per day and Gordondale - more than 3,000 barrels per day, representing incremental growth of about 20,000 barrels per day of NGLs. The addition of deep cut facilities adds significant value to our natural gas production due to the price uplift that is generated when we extract and sell higher-value ethane, propane, butane and condensate," said Renee Zemljak, Encana's Executive Vice-President, Marketing, Midstream & Fundamentals.

The first step in Encana's NGL extraction initiative is set to start up in December when Encana expects to add about 5,000 barrels per day of NGLs production from expanded facilities that Pembina has installed at its Musreau natural gas processing plant, located about 30 kilometres northwest of the Resthaven plant. The second step was taken in late 2010 when Encana agreed to a long-term processing arrangement with a midstream company to construct a new 120 million cubic feet per day natural gas processing plant in the Gordondale area, about 100 kilometres northwest of Grande Prairie, Alberta. Encana expects to extract an additional 3,000 barrels per day to 4,000 barrels per day of NGLs from the Gordondale plant, which is expected to be in service in late 2012. Step three is the Resthaven expansion, where Encana has agreed to a long-term processing arrangement with Pembina. Encana has also secured capacity on a 44-kilometre pipeline that Pembina plans to build to transport NGLs extracted at Resthaven to connect with its Peace Pipeline system for delivery to Edmonton.

Tags: EnCana Corporation