Veresen: Sunrise gas plant sanctioned

Veresen said that the Cutbank Ridge partnership, a partnership between Encana Corporation and Cutbank Dawson Gas Resources, a subsidiary of Mitsubishi Corporation, has sanctioned the 400 million cubic feet per day Sunrise gas plant, to be located in the Montney region near Dawson Creek in northeastern British Columbia.

In late 2014, Veresen Midstream, owned 50% by Veresen and 50% by affiliates of Kohlberg Kravis Roberts & Co., entered into a fee-for-service arrangement with Encana and CRP to undertake up to $5 billion of new midstream expansion for those parties in the Montney region, with the Sunrise gas plant being the first newly sanctioned project under the agreement. The estimated capital cost for the project (plant and ancillary facilities) is $860 million, the company said in a statement.

Veresen Midstream will fund approximately 60% of the Sunrise gas plant’s construction costs with its existing $1.275 billion credit facility, which is largely undrawn, with the balance to be contributed over time by Veresen and KKR. Veresen intends to fund its share of future contributions to Veresen Midstream with ongoing proceeds received from equity issued in connection with Veresen’s Premium Dividend™ and Dividend Reinvestment Plan. Encana will oversee the project management and construction of the facility on behalf of Veresen Midstream.

Construction of the Sunrise gas plant has commenced, with the facility expected to be in-service in late 2017. Veresen Midstream has invested approximately $130 million in the facility to date.

Veresen Midstream anticipates that CRP will proceed to a final investment decision for the 200 mmcf/d Tower gas plant in late 2015. CRP has also proposed to add an incremental 200 mmcf/d of compression and 400 mmcf/d of refrigeration capacity to the Saturn compressor site, effectively converting this site into a 400 mmcf/d gas plant.

A final investment decision for this project could also be made in late 2015 or early 2016.

Image: Veresen Midstream