Calgary-based Encana looks to triple natural gas liquids output in Alberta

Lauren Krugel, Canadian Press, October 14, 2011

Encana Corp., Canada’s largest gas producer, has entered into an agreement with Pembina Pipeline Corp. as it looks to triple liquids-rich natural gas production in the Alberta deep basin.

Pembina, which operates several conduits that transport crude oil and gas liquids to major pipeline hubs, will invest about C$230 million to expand the processing and liquids extraction capacity of the Resthaven plant.

The Resthaven area, in west-central Alberta, is known for its prolific liquids rich natural gas supply.

In the first of the two-phase expansion, Encana expects to boost extraction of natural gas liquids (NGLs) at Resthaven to about 8,000 barrels per day (bpd) from about 1,000 bpd.

The second phase is expected to add another 4,000 barrels per day of extracted NGLs from Encana’s liquids-rich natural gas production in the region.

Encana, which has been looking to divest $1-$2 billion worth of non-core assets, sold some natural gas midstream assets in Colorado and its Barnett Shale natural gas assets in North Texas to cut back on spending and cope with weak natural gas prices.

“Over the next number of years, we expect our NGLs extraction to triple from about 10,000 barrels per day to about 30,000 barrels per day,” said Renee Zemljak, Encana’s executive vice-president, marketing, midstream & fundamentals.

Encana is looking at production of 12,000 bpd at Resthaven, about 5,000 bpd at Musreau and more than 3,000 bpd at Gordondale, representing an incremental growth of about 20,000 bpd of NGLs.

The plant capacity expansion is scheduled to come on stream in late-2013.

While Encana shares closed at C$20.77 on Thursday, Pembina closed at C$25.50 on the Toronto Stock Exchange.