... Keyera Acquiring 50 Percent Interest in Pipeline

Keyera Acquiring Interest in Portion of Diluent Pipeline

ProjectNotesKeyera Corp., one of the largest natural gas midstream businesses in Canada, announced that it has agreed to acquire a 50 percent interest in the diluent Grand Rapids Pipeline.

Grand Rapids Pipeline LP will construct the 45-km (28 mile) Grand Rapids Pipeline, and Keyera’s interest is in the southernmost portion of the 20-in. pipeline. Grand Rapids Pipeline LP is an affiliate of TransCanada PipeLines and Brion Energy Corporation.

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The pipeline will extend from Keyera’s Edmonton Terminal to TransCanada’s Heartland Terminal near Fort Saskatchewan as part of TransCanada’s previously announced Grand Rapids Pipeline project. In connection with this agreement, Keyera will be constructing a pump station at its terminal where the pipeline will connect.

“As bitumen production continues to increase, so does demand for our industry-leading diluent handling services at the Edmonton/Fort Saskatchewan hub”, said David Smith, Keyera’s president and CEO. “We currently provide customers with the most complete diluent network in the industry, offering access to the most receipt and delivery connections, as well as storage options. This pipeline further enhances our diluent handling services by adding another connection point, increasing our pipeline capacity and improving the flexibility and reliability of our system. Keyera values the opportunity to enter into this joint venture with Grand Rapids, which is yet another strong industry partnership providing critical infrastructure for oil sands producers.”

Under a 50-50 joint venture agreement, once the pipeline has been completed Grand Rapids will contribute it to the joint venture and Keyera will contribute the new pump station in Edmonton. Based on current estimates, Keyera expects its total contribution to the joint venture will be approximately $140 million.

Keyera will be operator of the pipeline and the Keyera Edmonton Terminal pump station once construction is complete and the assets are in service. The expected in-service date is in the second half of 2017, assuming the current schedule is maintained.

Based on the current design, the pipeline is expected to provide Keyera with proprietary access to at least 225,000 net barrels per day of additional diluent transportation capacity between Edmonton and Fort Saskatchewan. A portion of this capacity will be used to meet Keyera’s commitments under existing agreements with customers for diluent transportation, which total at least 485,000 barrels per day by 2019.

The remaining capacity will be available for new diluent transportation business. Keyera also plans to add connectivity between its existing Fort Saskatchewan Condensate System and the Pipeline. Based on preliminary engineering, the connection costs are expected to range between $40 million and $60 million.

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