Tourmaline Oil has given the green light to expand a brand new natural gas processing plant in Northeast B.C.

The Gundy deep cut facility, designed to process liquids-rich natural gas from the Montney play, is expected to start operating in June 2019.

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On Thursday, Tourmaline said it has approved a project to effectively double capacity at the Gundy plant, from 200 mmcf/d to 400 mmcf/d, noted GMP FirstEnergy analyst Robert Fitzmartyn.

The expansion is expected to cost Tourmaline $150 million, which analysts said in line with the capital cost of the first phase.

Tourmaline said it is directing its growth capital to the Gundy area of the Montney play because it is the highest-return project in its inventory.

The Gundy plant expansion is expected to come online in late 2021.

Tourmaline said it believes the incremental gas volumes will be delivered into a period of improved natural gas prices.

“Tourmaline remains bullish on the outlook for Canadian natural gas pricing, believing the fourth quarter 2021 commissioning will better align with an improved gas quote, thus justifying the increase in associated natural gas production at Gundy,” Fitzmartyn wrote in a research note.

He added that Gundy has superior economics compared to Tourmaline’s other operating areas, with operating costs less than $3.00/boe