Western Canada-focused Pembina Gas Infrastructure Inc. (PGI) is aiming to expand its natural gas infrastructure in the Montney and Duvernay formations after securing a half-stake in Whitecap Resources Inc.’s 15-07 Kaybob Complex.
Kaybob, being sold for C$420 million ($307 million), has natural gas processing capacity of 165 MMcf/d and condensate stabilization capacity of 15,000 b/d.
PGI, jointly owned by Pembina Pipeline Corp. and private equity giant KKR, also agreed to support “future infrastructure development” in Whitecap’s recently sanctioned Lator project.
The Montney and Duvernay natural gas-rich formations in British Columbia (BC) and Alberta “have significant growth potential,” PGI CEO Chris Rousch said. “The transaction further demonstrates the ability for Pembina’s integrated value chain to meet the growth demands of our customers.”
Whitecap executives last year said natural gas development in the Montney and Duvernay would increase by double-digits in 2024 as LNG opportunities were beginning to emerge in Western Canada.
The Shell plc-led LNG Canada project in BC is under construction. And late last month, Pembina and the Haisla Nation sanctioned another BC liquefied natural gas project, Cedar LNG Partners LP’s 3.3 million metric ton/year export facility. Late 2028 is the target to begin exports from the floating LNG facility.
Under terms of the PGI agreement, Whitecap would continue to operate Kaybob. It also agreed to a long-term take-or-pay agreement for PGI’s capacity. In addition, Whitecap is committing an area of dedication to PGI for all volumes produced from the area.
PGI also agreed to fund Whitecap’s recently sanctioned Lator development in the Montney.
Lator “represents the next stage of meaningful growth…with 90,000 acres and up to 450 identified top tier Montney locations,” Whitecap executives said. Full-scale development is set to begin in 2026 with “a ramp up to facility capacity by late 2029.”
Whitecap plans to design, construct and operate Lator. PGI in turn agreed to fund all of the battery and gathering lateral, including 150,000 Mcf/d of gas compression capacity and up to 15,000 b/d of condensate stabilization capacity.
PGI would be provided with a dedicated area by Whitecap, which also agreed to long-term fixed take-or-pay commitments “for priority access” to the project.
Meanwhile, Whitecap in June sold a 50% interest in the Musreau 05-09 gas processing facility to Calgary-based Topaz Energy Corp. for C$100 million ($73 million). Topaz, an energy investment company, primarily generates revenue from assets operated by natural gas producers, including Canada’s top natural gas explorer, Tourmaline Oil Corp.
Similar to the PGI transaction, Whitecap retained operatorship in Musreau and secured a long-term fixed take-or-pay commitment to access capacity. Musreau, completed in March, has 43,000 Mcf/d of gas compression capacity and 12,500 b/d of condensate stabilization capacity. Facility throughput recently stood at 14,000 boe/d.
“Our Montney production at Musreau is liquids-rich, with wells that will produce upwards of 75% liquids from two Montney benches, and the area represents an important development for Whitecap,” Whitecap executives said. “We plan to reach capacity at the facility by the end of 2024 after we bring on a total of eight additional wells.”
