Pembina to export Canadian propane to Asia, ship US ethane to Alberta

By REBECCA PENTY
Bloomberg

Pembina Pipeline is planning to spend $1.15 billion in a US expansion to export Canadian propane to Asia and ship ethane from North Dakota to Alberta.

Canada’s third-largest pipeline company will gain access to future natural gas liquids developments in the Bakken shale in North Dakota through the $650 million purchase of Riverstone Holdingss 700-kilometer (435-mile), 40,000-bpd Vantage pipeline and an extraction plant stake, the Calgary- based company said.

It also plans to build a propane terminal in Portland, Oregon, for about $500 million.

The purchase is the largest for Pembina since it acquired Provident Energy for C$3.2 billion ($2.9 billion) in 2012, data compiled by Bloomberg show.

The pipeline and extraction plant are backed by long-term contracts from producers, which are seeking new markets for ethane as output from shale formations soars in the US.

“It’s the kind of deal they have to do” to grow, Steven Paget, an analyst at FirstEnergy Capital Corp. in Calgary, said of the acquisition. “This is a new pipeline, in a new direction, connecting to new customers.”

Pembina rose 3% to C$51.46 in Toronto on Tuesday, a record close, extending its gain this year to 38%.

The proposed propane export terminal would have initial capacity of 37,000 bpd and start operations in 2018, under an agreement with the Port of Portland.

Enbridge and TransCanada are Canada’s largest pipeline operators.

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