Pembina Pipeline Corp. has entered into an Engineering Support Agreement (ESA) for diluent and blended bitumen transportation services associated with enhanced oil recovery developments in northeast Alberta owned by KKD Oil Sands Partnership. KOSP is a partnership between Statoil Canada Ltd. and PTTEP Canada Ltd.
Pembina and Statoil will proceed with negotiations to conclude long-term agreements for construction of and transportation service on a greenfield pipeline system – Cornerstone Pipeline – and associated infrastructure.
Cornerstone would transport diluent and blended bitumen between KOSP’s upstream developments and the Edmonton area, including diluent connectivity at Pembina’s Nexus Terminal.
Pembina and KOSP have agreed to spend up to $35 million on preliminary engineering work and to begin associated stakeholder consultation in support of KOSP’s transportation needs. Cornerstone could be in-service in 2017.
“Our preliminary capital cost estimate to undertake construction of a 200-mile, 12-inch diluent and 24-inch blended bitumen pipeline system is approximately $850 million,” said Pembina’s Michael Hantzsch, vice president, Oil Sands & Heavy Oil. “This size of pipe would allow us to phase in expansions down the road with incremental capital. We also may consider upsizing the pipelines to 20-inch and 30-inch, respectively, should the work conducted under the ESA indicate there are sufficient volumes.”