​Keyera to proceed with second phase of new Montney gas plant

Map: Keyera Corp.

Keyera Corp. says it is proceeding with phase two of its Wapiti Gas Plant near Grande Prairie, Alta., in the liquids-rich Montney play.

The project, which has an estimated cost of approximately $150 million, will add 150 million cubic feet per day of sour gas processing to the plant, which is currently under construction.

Keyera is also expanding the two gathering systems that will deliver volumes to the plant, supported by commitments from its two primary customers, Paramount Resources and Pipestone Oil Corp.

“With the volume commitments we are seeing, it is evident that producers continue to have confidence in this region as one of the most economic developments in the Western Canada Sedimentary Basin,” CEO David Smith said in a statement.

The expansion announcement was not a surprise to market analysts.

“Keyera had been indicating the second phase at the Wapiti facility was likely ever since the original plant was announced in May 2017,” GMP FirstEnergy’s Ian Gillies wrote in a research note on Wednesday. “Keyera improves its corporate and project return metrics from adding these bolt-on projects that improve cash flow with only modest capital requirements.”

Despite recent announcements about Keyera expanding into blending and storage in the U.S., the Montney play is its most meaningful near term source for growth, Gillies said.

As most of the spending for the expansion is expected to occur in 2019-2020, the company has not increased its 2018 capital spending forecast. The project is expected to be complete in mid-2020.

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