New colossal $570-million plant in the works just outside Edmonton

The oil and gas sector in Alberta continues to chug along, with a massive new plant announced just outside of Edmonton to the tune of $570 million.

Pembina Pipeline Corporation announced earlier this week that it is proceeding with the Heartland Extraction Plant (“HEP”), which will be in Alberta’s Industrial Heartland, northeast of Edmonton.

The new plant, or HEP, will involve liquid extraction rights on the Yellowhead Pipeline, with Pembina and Dow reaching a mutually beneficial solution that has increased the overall ethane supply commitment.

“As previously disclosed, Pembina pursued an optimized ethane portfolio solution in support of its Dow supply commitments and is excited to sanction this project, which also provides Pembina the economic benefits of propane-plus natural gas liquids (‘NGL’) production,” a news release stated.

HEP has an estimated cost of approximately $570 million and an anticipated in-service date in late 2029.

Pembina signed a long-term agreement at HEP to supply Dow with ethane beginning in late 2029, scaling to 22,500 barrels per day (“bpd”) by the end of 2030. Following extraction at HEP, the ethane-plus mix will be processed at a combination of Dow’s Fort Saskatchewan facility and Pembina’s Redwater Complex.

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The new agreement includes Pembina supplying 22,500 bpd at HEP to Dow and a further 35,000 bpd due to an amended supply agreement, bringing the total to 57,500 bpd of ethane, a 15 per cent jump compared to an original agreement between the two giants of 50,000 bpd.

“This outcome further demonstrates Pembina’s ability to find win-win solutions with our customers. We have strengthened our relationship with Dow while advancing Pembina’s strategy and ability to deliver capital-efficient growth,” said Scott Burrows, president and chief executive officer of Pembina.

“By aligning volumes with Dow’s needs and leveraging our existing asset base, we are enhancing the value of our NGL franchise and catalyzing hydrocarbon demand in Western Canada.”