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Pembina hikes cost estimate for its share of Alberta petchem plant

Pembina Pipeline Corp. raised its share of the capital cost of a planned integrated propane dehydrogenation and polypropylene plant in Alberta to C$2.7 billion to account for a newly executed lump sum contract for the plant's propane dehydrogenation facility.

Pembina previously pegged its net investment at C$2.5 billion. The midstream service provider said the updated cost estimate will not affect its previously announced 2020 budget, according to a Jan. 7 news release.

Canada Kuwait Petrochemical Corp., a joint venture of Pembina and Petrochemical Industries Co. KSC of Kuwait, executed a lump sum engineering, procurement and construction contract for the construction of the propane dehydrogenation facility. The contract fixed about 60% of the costs related to the integrated plant for cost certainty, the company said.

Heartland Canada Partners, a 50/50 partnership between construction companies Fluor Canada Ltd. and Kiewit Construction Services ULC, will serve as the contractor for the propane dehydrogenation facility. Canada Kuwait Petrochemical is still looking for a contractor for the polypropylene plant.

The joint venture also now expects the facilities to begin commercial service in the second half of 2023. Canada Kuwait Petrochemical previously scheduled a mid-2023 in-service date.

Pembina and Petrochemical Industries reached a positive final investment decision to build the 550,000-tonne-per-annum integrated plant in February 2019, after previously delaying a decision due to insufficient contracts. At the time of the final investment decision announcement, the project was expected to cost C$4.5 billion.