Western Canadian NGL production to fall: Keyera

OREANDA-NEWS. February 15, 2016. Western Canadian NGL production is poised to fall given the current price environment, Keyera executives warned on the company's earnings call today.

"We're just cognizant that if you look at the drilling activity occurring today, it's significantly lower than we've seen in years past," said senior vice president for gathering and processing Brad Lock.

The Calgary-based midstream processor said an extended period of low liquids prices could mandate a longer period of reduced drilling in the Western Canada Sedimentary (WCS) basin and "eventually affect our aggregate throughput volumes."

Lock stressed that low-cost production near its facilities, including the recently expanded Wilson Creek raw gas and condensate pipeline, is still economic, "although not nearly as attractive with low liquids prices."

While Keyera expects to see lower throughput volumes in 2016, it hasn't yet seen a decline across its systems. During the fourth quarter of 2015, Keyera's gross NGL processing throughput was 137,000 b/d, up from 114,000 b/d during the same quarter in 2014.

Keyera's profit for the fourth quarter of 2015 was C\\$20.215mn (\\$14.514mn), down from C\\$29.387mn (\\$21.099mn) during the fourth quarter of 2014.

This year Keyera will invest between \\$600-700mn on growth capital projects, primarily on already announced NGL infrastructure, including an increase of propane-plus fractionation capacity at Keyera's Fort Saskatchewan (KFS) processing facility. The KFS expansion, which will boost fractionation capacity from 30,000 b/d to 65,000 b/d, will be operational late in the second quarter, a bit later than Keyera originally projected. Keyera is also adding two additional NGL storage caverns at the facility for a total of 15 caverns. The two new caverns are expected to enter service in 2017 and 2018, respectively.