Calgary, Alberta, Canada-based Keyera Facilities Income Fund says it operates one of the largest independent natural gas midstream companies in western Canada with a processing capacity of 1.7 billion cubic feet of natural gas per day.

With a processing capacity of 1.7 billion cubic feet of natural gas per day, Calgary, Alberta, Canada-based Keyera Facilities Income Fund says it operates one of the largest independent natural gas midstream companies in western Canada. That’s not a bad feat, given that Keyera has been a public income trust only since 2003, President and CEO Jim Bertram adds.

In October 2006, Canada changed the taxation rules of income trusts, thereby eliminating their tax-exempt status effective 2011. “I think people are asking the question, ‘What will become of income trusts post-2011?’” Bertram says.

“While we’re certainly not afraid to become a corporation, we’re not in a rush to change the status that we have today. As a public company, and certainly as an income trust, there was a lot of talk about stable distributions and we’ve certainly been able to maintain that. I believe as we go forward, income trusts will have to differentiate themselves and the best way to do that is to continue to grow your distributions.”

Distribution Increase
In the past four years, Keyera has increased its distributions by 38 percent. The company’s rapid growth can be attributed to a number of things, he says, including the $325 million in acquisitions it has made since its inception. Its largest one to date was the $270 million acquisition of Canadian midstream facilities from Chevron.

“It was a great acquisition in that it allowed us to consolidate some assets we previously had ownership interest in,” Bertram says. “It really cemented our position in the Edmonton/Fort Saskatchewan energy hub, which is rapidly becoming the largest energy hub in North America.”

Keyera has interest in 16 gas processing plants, 15 of which it operates itself. It also provides natural gas liquid (NGL) processing, transportation and storage services at its facilities in Edmonton and Fort Saskatchewan. “We’ve identified and constructed a number of organic growth projects in or around these existing assets,” Bertram states.

‘Ahead of the Curve’
Keyera says it is well aware of the explosive growth coming out of the Fort McMurray oil sands. In fact, Bertram adds, there is more than $100 billion in proposed projects with up to four million barrels of oil per day coming on stream in the next 10 to 15 years.

“There are eight proposed upgrades in our backyard, and most of this oil is heavy, which will require a lot of infrastructure and condensates,” he notes. “Storage services are going to be required by this growth projection, and we provide NGL storage, including condensate.”

In September, the company announced that it would “significantly expand” the storage capacity at its NGL processing and storage facility in Fort Saskatchewan, Alberta. This includes mining four new underground storage caverns. “We also constructed a $10 million brine pond, which is salt water used to displace natural gas liquids when you store products in underground caverns,” Bertram says. “This has allowed us to maximize the utilization of our storage caverns.”

However, he notes, “processing gas through large sour gas plants means we certainly need to be aware of the environmental consequences of our actions. We have five separate asset gas injection facilities where we put H2S and CO2 back into underground reservoirs, so we believe we’ve been well ahead of the curve on that front.”

Recent Accolades
In 2003, Keyera spent $12 million to build a plant to capture and liquefy CO2 and allow it to be injected back into the ground for miscible floods for enhanced oil recovery purposes. These efforts earned the company an Emerald Award that year. In 2002, the company received an Emerald Award for its Rimbey gas plant’s clean air initiative, which reduced sulphur emissions by 75 percent.

Bertram says Keyera is a service company. “I think we’ll continue to look at ways to better provide services for our customers and try to maintain the cost structure around our services,” he notes. “We think that’s very important in the western Canada sedimentary basin.

“Energy is going to continue to be important to people in North America, and we believe that the western Canada sedimentary basin has a lot of natural gas to be discovered and produced.”

What Lies Ahead
Bertram says Keyera plans to increase its cavern storage capabilities and seek more opportunities in truck and rail services in an effort to “continue to increase our ability to process gas in the western part of the basin. “We have a very strong asset position in the [Calgary] energy hub. Well over $100 million in proposed projects have been announced. [Meanwhile,] we’re trying to provide services to these oil sands producers,” he continues.

“Our vision is to continue to be a dominant energy service company, and we’d like to continue to grow our distributions for the benefit of our shareholders.”�