Canadian Natural confirms NGL agreement
Williams to install capture equipment
Canadian Natural Resources Ltd. confirmed Wednesday that it has signed a deal to capture natural gas liquids at its Horizon oilsands upgrader near Fort McMurray.
As previously reported in the Herald, the company said it has an agreement with Williams Energy Canada which will install equipment at the upgrader to divert liquids such as ethane and propane out of its off-gas stream, leaving just methane to be burned for energy.
Williams’ capital budget for the project, which includes a pipeline extension, is between $500 million and $600 million.
In a note to investors on Wednesday, CIBC World Markets analyst Andrew Potter said the deal is good for CNRL. “No detail was provided on the amount of NGL produced or the gas purchases that will be displaced by this, but will clearly result in some reduction to the approximately 900 cubic feet per barrel of natural gas consumption at Horizon,” he wrote.
“Overall we view this announcement as a slight positive as CNQ should see reduced opex (operating expenses) along with improved environmental performance for no capital exposure — a good combination.”
The process is to eventually reduce carbon dioxide emissions from Horizon by about 200,000 tonnes per year, estimated to equate to two or three per cent of the total. It is also to reduce sulphur emissions linked to acid rain.
The Canadian branch of Oklahoma-based Williams Cos. announced the agreement last week but said the oilsands company had asked not to be identified, although it could only have been either CNRL or Syncrude Canada.
The agreement is similar to an existing one with Suncor Energy Inc. — in both cases, Williams will gather off-gas produced from bitumen feedstock during the upgrading process and transport the NGL/olefins mixture to its expanded Redwater facility northeast of Edmonton.
Williams said the CNRL deal is expected to result in the recovery of 12,000 barrels per day of NGL/olefins by mid2015 and will likely grow to 15,000 bpd by 2018.
Canadian Natural also announced Wednesday a 12-day maintenance turnaround scheduled for the third quarter has been pushed back to Oct. 11. It said full year production guidance remains unchanged at 90,000 to 98,000 barrels per day. Williams is one of the largest pipeline and gas-processing companies in North America.