Pembina Plans $1.2 Billion U.S. Foray With Pipe, Terminal

Pembina Pipeline Corp. is planning to spend $1.15 billion in a U.S. expansion to export Canadian propane to Asia and ship ethane from North Dakota to Alberta.

Canada’s third-largest pipeline company will gain access to future natural gas liquids developments in the Bakken shale in North Dakota through the $650 million purchase of Riverstone Holdings LLC’s 700-kilometer (435-mile), 40,000-barrel-a-day Vantage pipeline and an extraction plant stake, the Calgary-based company said today. It also plans to build a propane terminal in Portland, Oregon, for about $500 million.

The purchase is the largest for Pembina since it acquired Provident Energy Ltd. for C$3.2 billion ($2.9 billion) in 2012, data compiled by Bloomberg show. The pipeline and extraction plant are backed by long-term contracts from producers, which are seeking new markets for ethane as output from shale formations soars in the U.S.

“It’s the kind of deal they have to do” to grow, Steven Paget, an analyst at FirstEnergy Capital Corp. in Calgary, said of the acquisition. “This is a new pipeline, in a new direction, connecting to new customers.”

Pembina rose 3 percent to C$51.46 in Toronto today, a record close, extending its gain this year to 38 percent.

The proposed propane export terminal would have initial capacity of 37,000 barrels a day and start operations in 2018, under an agreement with the Port of Portland.

Enbridge Inc. and TransCanada Corp. are Canada’s largest pipeline operators.