PBA said it secured sufficient contracts for a $2B expansion, slightly larger than TD had expected and underpins the expansion positively; the project underscores PBA's competitive positioning and its ability to secure incremental business to support growing volumes coming from western Canada, the firm says.
The core of the phase-3 expansion will involve constructing a new pipeline from Fox Creek, Alberta, to the Edmonton area, which is expected to have an initial capacity of 320K bbl/day and an ultimate capacity of more than 500K bbl/day.
PBA's previously announced 2014 capital spending plan will increase from to $1.7B from $1.5B; most of the spending associated with the project will occur during the main construction periods in 2015-16.
PBA plans to spend ~$670M in its conventional pipelines business, $510M toward the midstream segment on initiatives it says will increase its fee-for-service business, $260M on construction of several new facilities within its gas services business, and $60M to its oil sands and heavy oil business, largely to advance work on the proposed Cornerstone pipeline.
Pembina Pipeline (PBA +0.4%) says it plans to proceed with a $115M expansion of its Peace pipeline system in Alberta, which is expected to initially deliver ~40K bbl/day of additional liquids to PBA's Fox Creek Terminal.
Once the project is complete, PBA expects to have sufficient capacity and operational flexibility within the Simonette to Fox Creek corridor to transport all future volumes nominated through the open season process of March 2013.