Pembina Pipeline Corporation (Calgary, Alb., Canada; www.pembina.com), along with Petrochemical Industries Company K.S.C. (PIC) of Kuwait, has announced that Canada Kuwait Petrochemical Corporation (CKPC) has executed a lump sum engineering, procurement and construction (EPC) contract related to the construction of a new propane dehydrogenation (PDH) facility within its integrated PDH and polypropylene (PP) upgrading facility (PDH/PP Facility). With this contract, CKPC has fixed approximately 60% of the cost of the PDH/PP Facility thus far. In conjunction with execution of the lump sum contract, the Company also announces an update to its share of the capital cost for the PDH/PP Facility and project timing.
Following execution of the lump-sum EPC contract and with cost certainty for approximately 60% of the project cost, Pembina has revised its proportionate share of the capital cost of the PDH/PP Facility, including the 100% directly-owned supporting facilities, to $2.7 billion. The increase over the prior estimate is associated with the PDH facility, which is now fixed under the lump sum EPC contract. The revised capital cost estimate will not affect Pembina’s previously announced 2020 capital budget. CKPC now expects the PDH/PP Facility to be placed into commercial service in the second half of 2023.
“When faced with the proposition of trading returns for risk, Pembina has consistently chosen certainty and downside protection, particularly in new platforms or new businesses. Our relentless pursuit of a lump sum contract for the PDH facility reflects our disciplined and prudent approach to capital allocation,” said Mick Dilger, Pembina’s President and Chief Executive Officer. Mr. Dilger added, “This project is highly strategic for Pembina and our producer customers in the Western Canadian Sedimentary Basin. It offers a new demand source for domestically produced propane and supports ongoing development of Canada’s world-class hydrocarbon resources.”
CKPC has selected Heartland Canada Partners, a 50/50 partnership between Fluor Canada Ltd. and Kiewit Construction Services ULC as the EPC contractor for the PDH facility. Both companies bring extensive EPC track records for safety, quality and delivery in the petrochemical space in Canada. The contractor selection process for the PP facility is ongoing.