Pembina signs $650 million deal to buy Vantage line, associated assets

Sept. 2, 2014
Pembina Pipeline Corp., Calgary, has agreed to acquire the Vantage pipeline system and Mistral Midstream Inc.’s interest in the Saskatchewan ethane extraction plant (SEEP) for $650 million from certain entities affiliated with Riverstone Holdings LLC. The transaction, effective Aug. 1, is expected to close in the fourth quarter.

Pembina Pipeline Corp., Calgary, has agreed to acquire the Vantage pipeline system and Mistral Midstream Inc.’s interest in the Saskatchewan ethane extraction plant (SEEP) for $650 million from certain entities affiliated with Riverstone Holdings LLC. The transaction, effective Aug. 1, is expected to close in the fourth quarter.

Vantage is a recently constructed 700-km, 40,000-b/d, high-vapor-pressure pipeline originating from a large-scale gas plant in Tioga, ND, and terminating near Empress, Alta., where it is connected to the Alberta ethane gathering system.

The pipeline is underpinned by a long-term, take-or-pay transportation contract, and is sized to reach an ultimate capacity of 60,000 b/d through modest capital investment via the addition of two quarter point pump stations.

The deal ultimately provides Pembina with an ethane line from the Bakken shale to Alberta’s petrochemical market.

The transaction also calls for Pembina to acquire pipeline infrastructure from Mistral and Mistral’s interest in SEEP, a development-stage, 60-MMcfd deep-cut gas processing facility serving the southeast Saskatchewan Bakken region (OGJ Online, July 17, 2014).

The pipeline infrastructure includes a 105-km, 4-in. ethane pipeline and a 75-km gas gathering pipeline, both of which are under construction.

SEEP will receive liquids-rich gas produced from the Viewfield and Flat Lake gas plants and from TransGas’s local system. The facility is underpinned by both a long-term ethane sales agreement and a long-term, fee-for-service processing agreement.

SEEP is expected to produce 4,500 b/d of ethane and will connect into Vantage through a pipeline lateral that is also under construction. Pembina expects SEEP and the associated pipeline lateral to be in-service in mid-2015.

Pembina anticipates incurring additional capital expenditures of $100 million prior to yearend 2015 related to the transaction to complete the construction of SEEP and the associated gathering and delivery system.