Pembina Gas Infrastructure Inc. (PGI) has completed the purchase of a 50 percent stake in the Kaybob Complex in Alberta, Canada, from Whitecap Resources Inc. for CAD 420 million ($293.6 million).
The Kaybob Complex, in the Fox Creek region, has a natural gas processing capacity of 165 million cubic feet a day (MMcfd) and a condensate stabilization capacity of 15,000 barrels per day, according to Whitecap. Whitecap retains operatorship and the remaining 50 percent interest.
“As part of the Kaybob Complex acquisition, PGI and Whitecap entered into long-term, take-or-pay contracts at PGI’s nearby K3 facility to further support Whitecap’s liquids-rich developments”, Pembina Pipeline Corp. (Pembina), which holds a 60 percent ownership in PGI, said in an online statement. Kaybob South 3 (K3) is a gas processing plant with a licensed capacity of 671 million cubic feet a day, according to information on Pembina’s website.
“Based on Whitecap’s drilling results and updated forecasts, PGI now expects capacity at the Kaybob Complex to be fully utilized and has advanced developments to facilitate volumes at the K3 facility, which are expected to commence in the third quarter of 2025, or approximately one year earlier than originally contemplated”, the statement added.
As part of the transaction PGI will fund future infrastructure development in Whitecap’s Lator area, including battery and gathering laterals that PGI will eventually own. In exchange Whitecap signed long-term take-or-pay agreements for priority access to the new infrastructure, which will link PGI’s Musreau facility to the Lator area.
PGI expects to spend up to CAD 400 million (CAD 240 million net to Pembina) on the first phase of the new Lator infrastructure, “backstopped by long-term take-or-pay agreements based on the capital spent”, Calgary, Canada-based Pembina said. Gas from the new infrastructure will flow to the Musreau facility upon startup late 2026 or early 2027.
“In addition to the Musreau facility, PGI has two other deep-cut processing facilities in the vicinity that could provide incremental, timely and cost-effective processing solutions to Whitecap”, Pembina stated.
It added, “All natural gas liquids produced through the Kaybob Complex and Lator Infrastructure developments will flow through Pembina’s downstream infrastructure and are covered under a combination of new and extended long-term transportation, fractionation, and marketing services agreements, as well as an area-of-dedication for future growth”.
“This will support higher utilization of Pembina’s Peace Pipeline and Redwater Complex, including the RFS IV expansion, currently under construction”, Pembina said.
“Further, the arrangement for Whitecap’s Lator area development includes deep-cut processing and ethane-plus NGL transportation and fractionation, which supports Pembina’s ethane supply commitments in relation to Dow’s Path2Zero project”.
Pembina shouldered CAD 252 million of the total transaction proceeds. Closing had initially been expected in the third quarter of 2024, based on the announcement of the agreement July 2, 2024.
In a separate transaction, PGI said it had received from Veren Inc. “a request for additional battery infrastructure expected to enter service in 2025”. PGI has a pending agreement with Veren, formerly Crescent Point Energy Corp., to acquire Veren’s Gold Creek and Karr area oil batteries and provide up to CAD 300 million in funding for future infrastructure development in the area.
Gas from the batteries is processed at PGI’s Patterson Creek Gas Plant. The plant and batteries connect to Pembina’s Peace Pipeline system.
“Further scope definition of the initial battery, plus the additional battery infrastructure request, brings the total funding commitment to approximately [CA]$200 million ([CA]$120 million net to Pembina), which will be supported by long-term take-or-pay commitments”, Pembina said in the statement announcing the closure of the Whitecap transaction.
Veren, also based in Calgary, will retain operatorship of the assets being sold to PGI and assume operatorship of existing PGI-owned batteries in the area, according to the announcement of the agreement September 9, 2024.
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