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Canadian midstream company Keyera Corp. has officially completed the KAPS pipeline, a natural gas liquids (NGLs) and condensate pipeline spanning 357.3 miles (575 kilometers).
The KAPS pipeline will safely transport 350,000 barrels per day (bpd) of NGLs and condensate from the liquids-rich Montney and Duvernay basins to Keyera’s liquids processing and storage hub in Alberta’s Industrial Heartland, located in Fort Saskatchewan, Keyera said in a news release Wednesday. KAPS is operated by Keyera and 50 percent owned by Stonepeak, a leading alternative investment firm specializing in infrastructure and real assets. KAPS plays a “key role in positioning Alberta as an integral conduit for petrochemical and upgrading feedstock in the region”, Keyera said.
“KAPS is more than a pipeline, it’s truly an energy infrastructure solution that is helping to unlock partnership and prosperity through a purposeful approach”, Keyera President and CEO Dean Setoguchi said. “The support KAPS has received is a testament to both commercial need and the listen-first approach Keyera takes with external stakeholders and Indigenous communities. KAPS has been years in the making, and it is the platform that propels us forward and lets us focus on what we do best – supply responsibly produced Canadian energy”.
“The completion of the KAPS pipeline represents a significant milestone in the expansion of natural gas production in Western Canada”, Stonepeak Senior Managing Director Anthony Borreca said. “As natural gas continues to be a key contributor to the global energy mix and energy transition, especially in East Asia, we believe that KAPS has a critical role to play. KAPS has the ability to support decarbonization and energy security goals on a local and global level and we look forward to continuing to partner with Keyera as responsible stewards of this asset as production gets underway”.
“This is such great news for Keyera, its partners, and for Alberta”, Alberta Premier Danielle Smith said. “KAPS is furthering economic opportunity and prosperity for Indigenous partners and communities as well as for the entire province. I’m excited to see the positive impacts this project will have and the economic growth we’ll see in the years to come”.
Second Quarter Results
Meanwhile, Keyera reported a net income of $115.64 million (CAD 158.9 million) in the second quarter, compared to $125.91 million (CAD 173 million) in the similar period last year. The company’s adjusted EBITDA for the quarter was $ 213.09 million (CAD 292.8 million(, compared to $229.9 million (CAD 315.9 million) in the prior-year quarter, according to an earlier earnings release.
Keyera said its quarterly results were “driven by record contribution from the liquids infrastructure segment and third highest ever contribution from the marketing segment”.
Keyera’s gathering and processing segment delivered a realized margin of $61.13 million (CAD 84 million) for the second quarter, reflecting a $9.46 million (CAD 13 million) impact from the Alberta wildfires. Its liquids infrastructure segment delivered another quarterly record with a realized margin of $86.61 million (CAD 119 million), representing year-over-year growth of 22 percent. The growth was driven by initial contributions from the KAPS pipeline system, strong incremental demand for storage, and the acquisition of an additional 21 percent working interest in Keyera’s Fort Saskatchewan complex last year, the company said.
“Keyera continues to execute its strategy, delivering yet another strong quarter which was supported by the strength of all three business segments. This consistent performance enables us to return to our long history of sustainable dividend growth”, Setoguchi said. “In addition, KAPS has now fully integrated our value chain, making us more competitive, enhancing our ability to attract volumes, and maximizing value for all stakeholders”.
“Our future growth investments will focus on projects that leverage and enhance our existing core asset position in Western Canada. These opportunities include a capital-efficient de-bottleneck of existing fractionation capacity, a new fractionation expansion, and the potential for a KAPS Zone 4 expansion. Any decision to proceed on incremental investments will need to be underpinned by long-term contracts and strong returns”, Setoguchi said in a message to shareholders.
To contact the author, email rocky.teodoro@rigzone.com
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