Pembina Pipeline (PPL.TO) is proceeding with the Heartland Extraction Plant and provided an update on its ethane supply agreement with Dow in a Monday news release.
The upsized project is a new 750-million-cubic-feet-per-day straddle plant to extract natural gas liquids under Pembina's extraction rights on the Yellowhead pipeline. HEP now includes incremental capacity to accommodate future additional opportunities on a capital efficient basis.
Pembina has signed a long-term agreement to supply Dow with ethane starting in late 2029, scaling to 22,500 barrels per day by the end of 2030. Following extraction at HEP, ethane-los mix will be processed at Dow's Fort Saskatchewan facility and Pembina's Redwater Complex.
Pembina will retain the associated propane-plus production related to the project and will benefit from downstream fractionation and marketing of up to 9,500 b/d of propane-plus NGL.
HEP has an estimated cost of about $570 million and an anticipated in-service date in late 2029.
In connection with the new firm volume commitment at HEP, Pembina and Dow have amended the terms of an ethane supply agreement.
Under the amended agreement, Pembina will supply Dow with 35,000 b/d of ethane commencing with the start up of Dow's Path2Zero project, which is expected to enter service in 2029. Pembina will source the ethane from its existing supply portfolio.
Including the new agreement at HEP and the amended supply agreement, Pembina will supply Dow with a total of 57,500 b/d of ethane, representing a 15% increase compared to the original agreement of 50,000 b/d.