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Encana hopes to triple gas liquids output

Randy Eresman, president and CEO, of EnCana Natural Gas, addresses the company's annual meeting in Calgary, Wednesday, April 20, 2011.

Jeff McIntosh/The Canadian Press/Jeff McIntosh/The Canadian Press

Natural gas giant Encana Corp. hopes to triple its production of natural gas liquids from processing plants in Alberta as the company and partners boost investments to expand capacity in the industry.

Encana said Friday that it wants to triple output to 30,000 barrels a day from about 10,000 barrels.

Encana's statement came a few hours after Pembina Pipeline Corp. announced it will invest $230-million to build a new pipeline and expand the processing and liquids extraction capacity at the Resthaven plant in west central Alberta.

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The Calgary-based pipeline operator and gas processor said the plant capacity increase, the first of a two-phase expansion, will come on stream in late 2013.

It will boost the Resthaven daily output to 12,000 barrels from 1,000 barrels. Gas liquids are used to produce higher-value ethane, propane, butane and condensate.

"This is the third step in our well-developed plans to capture additional value from our liquids-rich natural gas production in Alberta's Deep Basin," said Renee Zemljak, Encana's executive vice-president of marketing, midstream and fundamentals.

"Over the next number of years, we expect our NGLs extraction to triple from about 10,000 barrels per day to about 30,000 barrels per day following investment by industry-leading third-party midstream companies at three Alberta Deep Basin plants: Resthaven – about 12,000 barrels per day, Musreau – about 5,000 barrels per day and Gordondale – more than 3,000 barrels per day, representing incremental growth of about 20,000 barrels per day of NGLs."

The first step in Encana's gas liquids expansion is set to begin in December when the company expects to add about 5,000 barrels per day from expanded pipelines Pembina has installed at its Musreau natural gas processing plant, about 30 kilometres northwest of the Resthaven plant.

Last year, Encana agreed to a long-term processing deal with another company to build a new processing plant in the Gordondale area, about 100 kilometres northwest of Grande Prairie.

That plant expects to add between 3,000 and 4,000 barrels a day in output.

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At Resthaven, Encana has struck a long-term processing arrangement with Pembina, which also plans to build a 44-kilometre pipeline to ship the liquids to the Peace pipeline for delivery to Edmonton.

Pembina said late Thursday that the initial phase of the Resthaven processing plant will have the capacity to handle 200 million cubic feet per day of natural gas and up to 13,000 barrels per day of liquids.

Once the planned expansion is completed, Pembina will own 100 per cent of the pipeline and 65 per cent of the Resthaven facility.

"The Resthaven facility represents a strategic step in building out our gas services business," said Bob Michaleski, Pembina's president and chief executive.

Pembina shares closed Thursday at $25.50, up 6 cents, on the Toronto Stock Exchange.

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