Keyera Corp. had first-quarter 2020 net earnings of C$85.6 million, more than double the C$35 million reported for the same period a year earlier. Keyera's first-quarter results were largely driven by its liquids infrastructure and marketing segments.
Keyera along with its partner, SemCAMS Midstream ULC, agreed to defer construction of the Key Access Pipeline System (KAPS) for 1 year. All transportation agreements have been amended to align with the deferral. Keyera now expects to place the pipeline in service in 2023, transporting NGL from the Montney shale to Keyera's liquids infrastructure in Fort Saskatchewan, Alta.
KAPS will consist of a 16-in. OD pipeline for condensate and a 12-in. OD pipeline for NGL mix. The system will run from northwest of Grande Prairie, Alta., to Keyera's Fort Saskatchewan fractionation and storage site. KAPS will initially be connected to Keyera's Pipestone, Wapiti, and Simonette gas plants and several third-party gas plants with volume commitments to KAPS. Shippers will also have direct access to Keyera's condensate hub.
Keyera and SemCAMS plan to have nine gas plants operating in northwestern Alberta by 2022 with access to 2.25 bcfd of natural gas processing capacity and 130,000 b/d of condensate handling.
Keyera has completed construction of Wapiti gas plant’s 150-MMcfd Phase 2 and is working with customers to determine the optimal timing for its fourth-quarter 2020 commissioning. The expansion will double Wapiti’s capacity (OGJ Online, May 31, 2018).
During first-quarter 2020 construction continued at Keyera’s 4.5-million bbl Wildhorse crude oil storage and blending terminal in Cushing, Okla. The company expects to bring the terminal into service second-half 2020.
Keyera said construction of its 200-MMcfd Pipestone gas plant is progressing ahead of schedule and is now expected to be operational fourth-quarter 2020. Keyera has a 20-year infrastructure development and midstream service agreement with Ovintiv to support its condensate focused Pipestone Montney development near Grande Prairie, Alta.
Liquids infrastructure generated C$102 million in operating margin for Keyera in first-quarter 2020, up 8% from first-quarter 2019 due to increased demand for condensate transportation and storage services. The volume of condensate delivered to the oil sands increased by 28% over the same period last year and 9% over fourth-quarter 2019.
In April 2020, however, several oil sands producers announced production cuts following the sharp decline in global oil prices. Demand for condensate has dramatically decreased as a result, leading to lower volumes flowing through Keyera's condensate system. The company said it continues to monitor the situation but does not expect a material financial impact in 2020 due to long-term, take-or-pay arrangements in place with multiple major oil sands producers.
Also in April 2020, Keyera placed a new Fort Saskatchewan cavern into service and now has 15.5 million bbl of underground NGL storage, which it describes as the largest underground storage position in the area. Keyera plans to put a seventeenth cavern into service first-half 2021 and was drilling and eighteenth as of July 2019.