KeySpan's New Alberta Pipeline Under Construction

KeySpan Energy Canada announced that construction of an 84 km natural gas pipeline is well underway to capture natural gas produced in the Pembina area of Alberta for delivery to KeySpan's Brazeau River gas plant. The area serviced by this pipeline is experiencing significant exploration and development activity, and current production in the area is severely restricted due to the lack of sour gas processing capacity. The pipeline is expected to be operational in August 2004.

The pipeline, known as the Brazeau Northeast Gas Gathering System, will extend from the EnerPro operated Bigoray gas plant located at 15-7-51-9W5M to the inlet of the KeySpan operated Brazeau River gas plant located at 6-12-46- 14W5M. The pipeline routing has been chosen to follow the development of the highly prospective Pembina Nisku edge bank play. The pipeline will be a combination of 6 and 8 inch diameter, will have a maximum capacity of 28 mmcf/d and has been designed to transport sour gas containing up to 25% hydrogen sulphide. Gross capital expenditures will be approximately $18.4 million. The KeySpan Brazeau River gas plant currently has sufficient capacity to process the full capacity of the pipeline.

KeySpan has a 30.7% working interest in the pipeline and will increase its ownership to 44.3% should another Brazeau River plant owner choose to not participate in the project. Several producers who are active in the capture area of the pipeline hold the remaining ownership interest. KeySpan will be the operator of the pipeline.

"This project provides producers with access to gathering infrastructure and processing capacity in a very active area, and is an example of how a midstream company can work with producers to create a win-win solution," said Jim Bertram, KeySpan's President and CEO. "Producers are able to focus on finding and producing natural gas, knowing that it will be connected and processed quickly. For KeySpan, this is another example of the many attractive internal growth projects available to us."