October 8, 2012

Joint venture secures $100 million pipeline contract

RICHARD GILBERT

staff writer

A partnership between Aecon and Robert B. Somerville Co. has been awarded a multi-million dollar contract for construction work related to a major pipeline expansion in Alberta.

“We look forward to continuing our work with Somerville and Inter Pipeline on this significant pipeline project,” said Teri McKibbon, Aecon’s chief operating officer.

“Aecon is committed to serving the resource sector and Canada’s energy suppliers with our comprehensive capabilities and are pleased to have been awarded this contract.”

The joint venture won a $100 million contract from Inter Pipeline, which is implementing a major integrated development plan for the Cold Lake and Polaris pipeline systems.

The work involves the construction of pumping stations, metering facilities, junction sites and associated pipeline connections at multiple sites.

Work is scheduled to begin this month, with completion expected in 2014.

In July, the joint venture was awarded a $600 million contract from Inter Pipeline for the installation of 560 kilometres of underground pipeline to expand the Cold Lake and Polaris pipelines.

The project involves the distribution of diluent between Edmonton and Fort McMurray, as well as engineering support and constructability reviews.

Inter Pipeline is planning to invest a total of about $2.1 billion on the pipeline expansion.

The company signed an agreement to provide bitumen blend and diluent transportation services to three oilsands projects owned by the FCCL Partnership (FCCL), which is a business venture between Cenovus Energy and ConocoPhillips.

The expansion plan involves the provision of 820,000 barrels per day of bitumen blend and diluent delivery capacity to FCCL through the construction of about 840 kilometres of new pipeline and seven new pump stations.

Under the agreement, FCCL has agreed to provide $225 million of cash funding commitments for the procurement of long lead-time materials, engineering costs, land procurement and regulatory activities.

These facilities will provide transportation service to existing FCCL projects at Foster Creek and Christina Lake, as well as the Narrows Lake project which is currently under development. On the Cold Lake pipeline system, two new pump stations will be added at the Foster Creek production site and a new pipeline connection will be built to the Narrows Lake oilsands development.

In addition, the existing Foster Creek extension will be twinned with a new 36-inch diameter pipeline and the Cold Lake mainline from La Corey to Hardisty will be twinned with a new 42-inch diameter pipeline.

In total, about 400 km of new pipeline will be added to the Cold Lake system and mainline capacity will increase from about 650,000 b/d to 1.2 million b/d.

Capital costs associated with the Cold Lake expansion program are currently estimated at $1.1 billion.

On the Polaris system, a major new 30-inch diameter pipeline will be constructed from the Edmonton area to the Christina Lake oil sands project.

In addition to this 340 km new-build project, 100 km of smaller diameter pipelines will be constructed to provide connections to the Foster Creek and Narrows Lake oil sands projects and several diluent receipt points at the Edmonton market hub.

Upon completion, planned system configuration capacity will increase from 120,000 b/d to 820,000 b/d.

Capital costs associated with the Polaris expansion program are currently estimated at $1 billion. Work on the Polaris and Cold Lake systems is scheduled to begin in January 2013.

The new facilities related to the Foster Creek and Christina Lake expansion projects will be operational in mid-2014 and those related to the Narrows Lake project will be operational in mid-2016.

Inter Pipeline wholly owns the Polaris pipeline system and owns 85 per cent of the Cold Lake pipeline system.

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