FCCL lets contract for Alberta transportation expansion
The FCCL Partnership, a business venture between Cenovus Energy and ConocoPhillips, entered into a binding shipper support agreement with Inter Pipeline Fund (IPF) under which IPF will provide bitumen blend and diluent transportation services to three major oil sands projects owned by FCCL.
The FCCL Partnership, a business venture between Cenovus Energy and ConocoPhillips, entered into a binding shipper support agreement with Inter Pipeline Fund (IPF) under which IPF will provide bitumen blend and diluent transportation services to three major oil sands projects owned by FCCL. Based on the agreement, IPF intends to advance an 820,000 b/d integrated expansion of its Cold Lake and Polaris pipeline systems.
IPF’s expansion plans involve construction of 840 km of pipeline and seven pump stations, providing transportation to existing FCCL projects at Foster Creek and Christina Lake, as well as the Narrows Lake project, currently under development. IPF anticipates the facilities related to Foster Creek and Christina Lake will be operational by mid-2014 and those related to the Narrows Lake project by mid-2016.
Cenovus reported 160,000 b/d combined production from Foster Creek and Christina Lake for the quarter ended June 30, 38% higher than second-quarter 2011 (OGJ Online, July 25, 2012).
On the Cold Lake pipeline system, IPF will add two pump stations at the Foster Creek production site and a pipeline connection to the Narrows Lake oil sands development. It also will twin the existing Foster Creek extension with a 36-in. OD pipeline and the Cold Lake mainline from La Corey to Hardisty with a 42-in. OD pipeline. IPF will add a total of 400 km of pipeline to the Cold Lake system, increasing mainline capacity to 1.2 million b/d from 650,000 b/d.
On the Polaris system, IPF will build a 340-km, 30-in. OD pipeline from Edmonton to the Christina Lake oil sands project. The company also will build 100 km of smaller-diameter pipeline to provide connections to the Foster Creek and Narrows Lake oil sands projects and several diluent receipt points at the Edmonton market hub. System capacity will increase to 820,000 b/d from 120,000 b/d.
IPF estimates the expansion projects’ combined cost at $2.1 billion (Can.)—$1.1 billion (Can.) for Cold Lake and $1 billion (Can.) for Polaris. The shipper support agreement commits FCCL to provide $225 million (Can.) of funding for procurement of long lead-time materials, engineering costs, land procurement, and regulatory activities. In the event that final, binding transportation service agreements are not executed, IPF will be reimbursed for as much as $225 million (Can.) of incurred expenditures.
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