MOSCOW (MRC) -- Canadian midstream energy company Pembina Pipeline and private equity firm KKR have agreed to form a joint venture (Newco) that will combine their western Canadian natural gas processing assets, said Reuters.
Pembina will contribute to Newco its field-based gas processing assets, which include the Cutbank Complex, the Saturn Complex, the Resthaven Facility, the Duvernay Complex and the Saskatchewan Ethane Extraction Plant, as well as its 45% interest in Veresen Midstream.
Not included: Pembina's Empress, Younger and Burstall assets will be excluded from the transaction and Pembina will retain its current ownership position. Also, Pembina and KKR intend to dispose of Newco’s non-operated interest in the Key Access Pipeline System (KAPS) natural gas liquids (NGL) and condensate pipeline project in Alberta, following closing of the Newco deal.
Newco will be owned 60% by Pembina and 40% by KKR's global infrastructure funds. Pembina will serve as the operator and manager of Newco. Newco's permanent name is expected to be announced prior to closing.
As the energy sector has evolved, the opportunities available from bespoke partnerships between public and private infrastructure owners have become more compelling, particularly in the natural gas processing business, KKR said. In a separate statement, US-based Energy Transfer said that the sale of its stake in ETC would allow it to divest “high-quality Canadian assets at an attractive valuation to further deleverage its balance sheet and redeploy capital within its US footprint."
As per MRC, Pembina Pipeline expects to decide by the end of March on whether to proceed with a planned expansion of its Prince Rupert propane export terminal in British Columbia province. The terminal, with a capacity of 25,000 bbl/day, was commissioned early last year and began loading propane onto vessels in April. It exports propane of petrochemical quality.
As per MRC, Pembina Pipeline and Inter Pipeline (IPL) are mulling the prospects of dehydrogenation/polypropylene (PDH/PP) production in Alberta province. On May 31, 2021, Pembina and Inter Pipeline entered into an agreement (the "Strategic Combination") to create one of the largest and best positioned energy infrastructure companies in Canada. Together the companies' diversified and integrated asset base can support and grow an extensive value chain for natural gas, natural gas liquids and crude oil, from wellhead to end user, that far exceeds anything either company can do separately.
Pembina Pipeline has been a gas supplier to the North American power system for over 60 years. Pembina owns and operates pipelines that transport a variety of hydrocarbon fluids, including conventional and synthetic crude oil and others, produced in Western Canada and North Dakota.