Calgary-based SemCAMS ULC, a subsidiary of SemGroup Corp., Tulsa, has taken a final investment decision (FID) to proceed with its previously announced plan to build the proposed Wapiti sour gas processing plant to serve Montney producers in the Wapiti region of the Western Canadian Sedimentary Basin (OGJ Online, Aug. 17, 2016).
FID on the project follows a recent commitment by NuVista Energy Ltd., also of Calgary, to become an anchor tenant of the gas plant under a 15-year take-or-pay agreement for firm processing of as much as 120 MMcfd of raw gas from its condensate-rich Montney play, the companies said.
Designed to process as much as 200 MMcfd of raw sour gas and 20,000 b/d condensate, the Wapiti plant will be equipped to process acid gas via both acid-gas injection and by transport via SemCAMS’s existing Wapati-Simonette pipeline systems to its Kaybob South No. 3 (K3) and Kaybob Amalgamated (KA) sour gas plants, which have a combined gas processing capacity of 1.5 bcfd and sulfur processing capacity of 350 tonnes/day.
With engineering and license approval for the project already secured from Alberta Energy Regulator (AER), construction of the gas plant is scheduled to begin during second-quarter 2017, SemGroup said.
The Wapati gas plant, which will require a total investment of $300-350 million (Can.) to complete, is due for startup by second-quarter 2019.
Alongside its deal with NuVista, SemGroup said negotiations remain under way with other producers in the region for additional commitments to fully subscribe the Wapati plant’s remaining processing capacity.
As part of its 15-year take-or-pay agreement with SemCAMS, NuVista said it will supply the 120 MMcfd of gas to the Wapati plant from its Gold Creek, Pipestone, Elmworth, and surrounding-area blocks in annual increments of 40 MMcfd starting in 2019, 2020, and 2021, respectively.
The 80% take-or-pay terms of the deal, however, provide flexibility to produce above or below these firmly contracted amounts, according to NuVista.
Gas production from NuVista’s Bilbo and adjacent Southern lands operations will continue to be processed at Calgary-based Keyera Corp.’s Simonette gas plant, the company said.
Contact Robert Brelsford at [email protected].