Why Canada Needs More Diluent -- And Where They Will Get It -- RBN Energy -- October 11, 2016

In today's RBN Energy post, RBN provides some great information on NGL processing and fractionation by updating Alberta, Canada's activities.

According to RBN Energy, some data points:

• wet gas contains significant volumes of NGLs
• wet gas needs to be run through a natural gas processing plant to extract NGLs and remove impurities
• the resulting mixed NGLs need to be run through a fractionation plant to separate out natural gasoline and other "purity" NGLs
• natural gasoline (C5) is the in-demand diluent
• Much of the article focuses on Pembina Pipeline Corp
• PPC's new fractionator at its Redwater, Alberta, site can separate out ethane
• this new fractionator is a "twin" of an existing unit at the same location
• the fractionator can separate out  ethane (C2), propane (C3), normal butane (C4), and natural gasoline (C5) 
• PPC has also built C3+ fractionators
• C3+ fractionators can separate out propane (C3) and heavier NGLs (normal butane [C4] and natural gasoline ]C5) but not ethane (C2)

In addition to what PPC has already brought on line and will complete this year (2016), these are PPC's plans for 2017:

• a 100-MMcf/d Duvernay 1 gas processing plant near the company's Fox Creek Terminal (west-central Alberta); backed by a long-term take-or-pay contract
• developing plans for a twin plant, Duvernay II
• will finish and begin commercial operation of RFS III, a C3+ fractionator at Redwater facility

In addition, it should be noted that more crude oil production will come on-line in western Canada:

• Canadian oil sands will add about 850,000 bopd of production capacity in the 2015 - 2019 period 
• these were projects started years ago when price of oil was much higher; projects finally being completed
• these projects are driving the need for more diluent 
• diluent either in the form of natural gasoline (C5, a natural gas liquid) or field condensate (superlight crude oil (think Bakken oil condensates)
• Canadian oil sands will also spur development of oil and diluent pipelines, and oil and diluent storage capacity
• in-province demand fro diluent will increase 200,000 bopd (from the current 550,000 to 750,000 bopd by 2021 as the oil sands expansion projects come on line and ramp up to full production
• Alberta's current diluent needs are being met to a significant degree by out-of-province sources -- almost all from the US 

Diluent pipelines of note:

• Enbridge Southern Lights diluent pipeline from Manhattan, IL (near Chicago) to Alberta; 180,000 bopd
• Kinder Morgan Cochin Pipeline from Kankakee, IL (south of Chicago) to Fort to Alberta; 95,000 bop
• But now:
• Alberta focusing on in-province diluent from "wet" gas and field condensate production in Alberta's Montney and Duvernay plays

So much more at the RBN post linked above.

City of New Orleans, Arlo Guthrie