Pipeline transport company Pembina Pipeline (NYSE:PBA) announced in a press statement earlier this week that it is moving forward with previously announced objectives of expanding its Peace Pipeline's capacity by 55,000 barrels per day. This will be the second phase of an expansion project of the pipeline; Pembina is already at work on a prior stage.
Currently, the Peace Pipeline -- which runs through Western Canada -- operates at capacity in its crude oil and condensate portions. Pembina is now looking to finish its first expansion stage that will advance capacity by 40,000 barrels per day, up to a total of 195,000 barrels per day by October of this year.
The second phase is designed with stronger drilling in several Western Canada sites in mind; Pembina expects it to cost approximately $250 million. When completed, it will bring the Peace Pipeline capacity up to 250,000 barrels per day, with both expansions raising current capacity levels by 61%.
Pembina COO and President Mick Dilger talked about the business implications of the expansion in the release, saying:
The Phase 2 LVP Expansion will allow us to enhance the services we provide customers by easing potential capacity constraints in the near future. Further, this project will increase our fee-for-service, secured cash flow stream, thereby adding value to our shareholders.