Pembina Hits Pause on Canadian Petchem Project
Canada’s Pembina Pipeline said December 14 its capital spending in 2021 will total C$785mn (US$614mn) but advancing, with its Kuwaiti partner, a proposed C$4bn integrated propane dehydration and polypropylene (PDH/PP) facility near Edmonton won’t be part of those plans.
Pembina and Kuwait’s Petrochemical Industries Company KSC continue to evaluate the project through their joint venture, Canada Kuwait Petrochemical Limited Partnership (CKPC), but are facing “significant risks” from the ongoing Covid-19 pandemic, largely related to costs under the project's lump-sum construction contract, which remains under a force majeure condition. As a result, Pembina said, CKPC has suspended execution of the project indefinitely.
“CKPC is working through a process to manage, defer or cancel existing agreements with, among others, the lump-sum consortium, lenders, and technology licensers, in order to minimize the need for additional capital contributions,” Pembina said in a statement. “CKPC will continue to take action to safeguard its existing investment associated with long-lead equipment and intellectual property.”
Pembina said it would take a “material impairment” on its investment in CKPC in Q4 2020.
While the PDH/PP project is being deferred, Pembina said it will move forward next year with several other projects, some of which were deferred earlier this year.
Included among the restarted projects is its C$120mn Empress co-generation facility at the Empress NGL extraction plant in east central Alberta. The co-generation facility will use natural gas to generate up to 45 MW of electrical power and provide power and heat to the extraction facility.
All of the power will be consumed on-site, Pembina said, meeting about 90% of the site’s total power requirements and reducing CO2-equivalent emissions by about 88,000 metric tons/year.
While the project was deferred, Pembina continued to make certain investments to ensure it remained ‘shovel ready’. Turbine fabrication is now complete, with delivery scheduled for the fourth quarter. Assuming all regulatory and environmental approvals are received, the project should be in-service during Q1 2023.
Pembina also expects to spend about C$25mn next year related to ongoing regulatory and permitting requirements at its Jordan Cove LNG project in Oregon.