CALGARY, May 16, 2016 /CNW/ - Keyera Corp. (TSX:KEY) ("Keyera") today announced that it has entered into agreements with a subsidiary of a large creditworthy multi-national producer for construction of a natural gas gathering and processing complex in the Wapiti area south of Grand Prairie, Alberta (the "Project").

Subject to final sanctioning, the Project is expected to include a sour gas processing plant with acid gas injection capabilities, condensate processing facilities, associated gathering systems and field compressor stations. Either party may trigger the sanctioning decision at any time prior to the end of 2018. Based on preliminary estimates, Keyera expects the total cost of the Project to be approximately $600 million, with operations of the first phase targeted to start up in mid-2019.

The Project will be designed to process up to 300 million cubic feet per day of sour gas and 25,000 barrels per day of field condensate. The gas processing facilities are expected to be constructed in phases of 150 million cubic feet per day of capacity. Keyera is also evaluating options for a pipeline connection to Keyera's Wapiti raw gas gathering pipeline and Simonette gas plant.

Under the agreements, Keyera has acquired the main Project site, all third-party engineering work completed for the Project to date and a successfully-tested acid gas injection well for a total cost of approximately $19 million. Over the next several months, Keyera will complete a front-end engineering and design study and a detailed cost estimate for the Project.

The agreements include an area dedication and a take-or-pay commitment under a long-term gas handling agreement. Keyera is also negotiating with other producers in the area to commit additional volumes.

"Keyera has been looking for the right opportunity to increase its presence in the liquids-rich Montney," said David Smith, Keyera's President and Chief Executive Officer. "This Project, along with our Wapiti pipeline and Simonette gas plant, provide Keyera with an exciting position in a prolific geological zone that is one of the most economic development areas in the Western Canada Sedimentary Basin. We look forward to working with area stakeholders to develop this infrastructure in an environmentally and financially responsible manner."

About Keyera

Keyera Corp. (TSX:KEY) operates one of the largest midstream energy companies in Canada, providing essential services to oil and gas producers in the Western Canada Sedimentary Basin. Its predominantly fee-for-service based business consists of natural gas gathering and processing, natural gas liquids processing, transportation, storage, marketing, iso-octane production and sales, and an industry-leading condensate system in the Edmonton/Fort Saskatchewan area of Alberta. Keyera strives to provide high quality, value-added services to its customers across North America and is committed to conducting its business ethically, safely and in an environmentally and financially responsible manner.

Disclaimer

This news release contains forward-looking statements based on Keyera's current expectations and assumptions made by the management of Keyera relating to its business, the environment in which it operates, its future operations and the performance of its assets, including the proposed Project. As these forward-looking statements depend upon future events, actual outcomes may differ materially depending on factors such as: the accuracy of the construction schedule and cost estimates; producer interest in the services being offered; future operating results of the assets; the ability of Keyera to execute its strategic initiatives in connection with the Project; availability and cost of engineering resources, construction crews and materials; timely receipt of all necessary regulatory approvals or changes in requirements; changes in production decline rates; weather conditions; commodity supply/demand balances and prices; activities of producers, competitors, customers, business partners and others; overall economic conditions; access to capital and financing alternatives; operational risks associated with gas plant operation and oil and gas production; environmental liabilities; potential delays or changes in producer development plans in the area; the legislative, regulatory and tax environment; and other known or unknown factors. There can be no assurance that the results or developments anticipated by Keyera will be realized or that it will have the expected consequences for or effects on Keyera. 

For additional information on these and other factors, see Keyera's public filings on www.sedar.com. The information provided in this release is given as of the date hereof. Readers are cautioned that they should not unduly rely on forward-looking information. 

SOURCE Keyera Corp.