Good morning, everyone, and welcome to Keyera's inaugural Investor Day. I'm Lavonne Zdunich, the Director of Investor Relations.
I'm Eileen Marikar, Vice President of Finance, and I've been with Keyera for a little over 14 years. I've been with the company for this long because of our people and our very unique culture that makes it an exciting and rewarding place to come to work each and every day. Under the guidance of our experienced leadership team, we have delivered substantial results financially and operationally. We are very proud of our track record, and our goal is to continue to deliver steady growth for our shareholders for the long term.
While I've only been at Keyera for five years, I've spent the majority of my career in the energy industry. I've seen firsthand how Canadian oil and gas companies conduct their business in the Middle East, the North Sea, up in the oil sands, and across the prairies in Alberta and Saskatchewan. We are extremely proud of our industry. Canadian oil and gas, it's responsible, and it is reliable. Today, our presentations will show you what Keyera is doing to help deliver this responsible energy to the world. Just bear with us for a second.
Our speakers today, David Smith, President and CEO, Bradley Lock, our Senior VP and COO, Nancy Brennan, Senior VP and General Counsel, Dean Setoguchi, Senior VP and Chief Commercial Officer, Brian Martin, who's our VP of Business Development for Liquids Infrastructure, Jamie Urquhart, VP of Marketing, and Steven Kroeker, our Senior VP and CFO.
Keyera's leadership team extends beyond our speakers today. Also with us today, Jarrod Beztilny, Vice President, Operations, Gathering and Processing, John Hunszinger, VP Operations, Liquids Infrastructure, Kelly Hill, Vice President, Information Technology, Rick Koshman, Vice President, Corporate Development, Avery Ryder, Director of Treasury, Darren Rousch, General Manager, Marketing and Risk Management, and Brad Slessor, General Manager of our U.S. Operations. Before we get started today, I'd like to remind everybody that we will make statements that are forward-looking and contain non-GAAP financial measures. Please refer to slides four and five for more information. I'll now turn it over to Bradley Lock to get us started today, as we do with each meeting, with a safety moment. Brad?
Good morning. Thank you for coming this morning. My name is Brad Lock. As Eileen and Lavonne mentioned, I'm the Chief Operating Officer at Keyera. I've been with Keyera about 15 years. I came over from Chevron Canada Resources, when KeySpan, at the time, acquired the EnerPro assets. It's been an outstanding 15 years with an amazing group of people that are business-focused and customer-focused and we've delivered some outstanding results over the last while that we're looking forward to continuing in the years to come. Before we get started, just a couple of housekeeping items. For anybody who needs it, washrooms, men's washrooms are out the door, hang a left, and then hang an immediate right. For women's washroom, out the door, hang a left, and then hang an immediate left, which is basically right outside the door here.
In case of an emergency, if there's an alarm, there's two alarms that you would hear in this building. One is a slow intermittent alarm. If you hear that alarm, you wait in place. Okay? Nobody evacuate when that alarm goes on. There's a situation somewhere in the building that needs to be dealt with. If that alarm goes to a rapid alarm, we all want to evacuate, and we would basically go out the stairs that are just outside the door here. You can go out, hang a left down the stairs there, and we actually muster on the church across the road, and that's where we would need to head to.
If anybody has mobility challenges, what you will want to do is wait by the door and one of the fire marshals will guide you to an emergency evacuation point where you can actually take an emergency elevator down to the bottom stair. That is actually located just to the right of the reception desk as you go through the elevator lobby. As Eileen and Lavonne mentioned, we like to start every meeting with a safety or a value moment. What I'd like to talk to you a little bit about is furnace safety. A sobering fact, carbon monoxide poisoning from furnace failures is the number one cause of carbon monoxide poisoning in North America today. With winter coming, it's important that we all check our furnaces and make sure that they're in good working order, particularly if they are a natural gas-fired furnace.
The picture you see here is actually of a secondary heat exchanger on a forced natural gas furnace. The purpose of this unit is actually to exchange the hot combustion gas heat with the incoming cold gas that is circulated through the house. What you see here is actually a new one and a failed one. This failed one actually came from the house of one of our employees. In February of 2019, if anybody was in Calgary in February 2019, it was extremely cold. In the middle of the night, her and her family were all sleeping. The carbon monoxide detectors actually went off in their home. They did what they were supposed to do.
They gathered their kids, evacuated the house, called 911. 911 arrived, they actually went in and validated that there was a high carbon monoxide level in the house, and actually began to ventilate. Called the gas company, the gas company determined that this heat exchanger shown here actually did fail. That hot combustion gases out of the fire chamber was actually being put into the house, which was causing that rise of carbon monoxide in the house. Upon investigation, what she found was actually that several manufacturers of furnaces made prior to 2010 actually had a very high rate of these failures. Bryant, Payne and Carrier furnaces were actually experiencing exceptionally high rate of failure, this was very common and actually led to a class action lawsuit being filed in the U.S. over the manufacture of these furnaces.
The message from all of this is threefold. Number one, make sure that your carbon monoxide detectors are working. They save lives. They do expire after 10 years, so you want to make sure that your carbon monoxide detector is tested, working, and up to date. Secondly, if you have a natural gas furnace, I ask you to please get it checked by a certified individual. Third, if you actually have one of these furnaces, please do it right away because your family might be at risk. Thank you very much.
Good morning, everyone. Everyone awake now? Welcome to Keyera's first-ever Investor Day, and thank you for coming this morning. My name is David Smith, and I'm the President and CEO of Keyera. I think I know most of the people in the room. I've worked in the industry for more than 35 years now, and I've been with Keyera since our inception in 1998. Our theme today is delivering positive energy. For us, this has a double meaning. Delivering positive energy is what we do. It's in our mission, and it's in our vision, as you'll see. Delivering positive energy is also who we are. Bringing energy, enthusiasm, and passion to everything that we do, serving our customers, collaborating with our partners, respecting our neighbors, and delivering value for our shareholders. We hope you'll find this morning's discussion informative and energizing.
I'm going to begin by talking about the context for Keyera's strategy and outlook. We are a proudly Canadian company. Most of our assets are in Canada, and most of our employees are Canadian. We have strong competitive advantages in the Canadian energy infrastructure space, and we continue to believe that Keyera's growth opportunities in Canada are robust and long-term. While we will continue to pursue complementary high-return niche opportunities in the U.S., the focus of our strategy will continue to be on Canada, and we think Canada's oil and gas industry has a bright future. We are incredibly fortunate here in Canada. We have access to abundant energy resources, more than enough energy for 300 years at current consumption rates. The quality of our oil and gas resources is competitive with most other regions around the globe. These resources have provided Canadians with an incredibly high quality of life.
Access to low-cost, secure energy supplies leads directly to improved living conditions and economic progress. Canada is now in a position to share this advantage with the rest of the world, lifting billions out of poverty and improving the global environment at the same time. According to the IEA, the world's need for energy will continue to grow, increasing by 24% by 2040. Renewables will be the fastest-growing source of energy by far. However, to meet the world's demand, there will still be a growing need for oil and especially for natural gas. This is the opportunity for Canada and the reason for our optimism. Global population growth, urbanization, and economic development are driving the demand growth, and it's almost all in the developing world. By 2040, the developing world will account for 65% of the world's energy consumption.
Providing long-term, efficient, low-cost energy to the developing world has massive potential to improve the lives and health of people around the globe. The call for lower emissions, environmental protection, and social benefits from our industry will continue to intensify. How do we meet this demand responsibly and reliably? The answer is Canada. The world needs our positive energy. By providing our resources to the world markets, we can supply that long-term, efficient, low-cost energy to the developing world, improving the lives and health of billions. Canada is already one of the most responsible producers of oil and gas in the world, and we continue to improve. It is unfortunate but true, as you can see from this map, that most of the world's energy is produced in highly corrupt jurisdictions with little social or environmental protection.
Among energy-producing countries, Canada is an ESG leader in many important respects. Our strong, consistently enforced environmental regulations, our methane emissions restrictions and reductions, our carbon capture and sequestration technologies, our safe pipeline transportation systems, our worker safety track record, our human rights, transparency and ethics, our corporate governance, to name but a few. These are the reasons why we are very optimistic about the future of Canada's oil and gas sector. We need to be cost-competitive with other global sources of supply, and we need to build out the infrastructure to access those global markets. We are getting these things done, perhaps a little too slowly, but with the Trans Mountain expansion, with LNG Canada, with the Coastal GasLink Pipeline , with TC Energy's debottlenecking of their system in Western Canada, we are more confident about the industry's future than we have been for a few years.
I'm calling the bottom for Canadian oil and gas. Keyera's mission is connecting energy for life. We see our role as connecting the producers of energy and the consumers of energy responsibly, efficiently, cleanly, contributing to an improved quality of life for everyone and a healthier planet. Our vision is to be the North American leader in delivering energy infrastructure solutions. For us, being the leader doesn't mean that we need to be the biggest or that we need to be in every energy-related business or market or product or service. What it does mean is that we strive to set the standard to be the best at the energy infrastructure businesses that we choose to be in, and we deliver excellence. There are many ways to measure excellence in our business. We've chosen in our vision to focus on three.
Number one in safety performance, number one in customer recognition, and number one in total shareholder return. I should also emphasize that we're in the business for the long term. When we look at our people decisions, our maintenance decisions, our investment decisions, our focus on operational excellence, we do that all based on the assumption that we will be operating our businesses and we'll be operating our facilities for decades into the future. Our values that have stood the test of time as we've evolved as an organization over the past 20 years are on this slide. Health, safety, and environment, caring for people and caring for the planet. Integrity and trust, doing the right thing for the right reasons. Responsibility and accountability. For us, that means delivering on our commitments to our customers, to ourselves, and to all of our stakeholders.
Teamwork means embracing diversity and working together to accomplish the goals that we have. Finally, business spirit is about encouraging drive and passion to add value for our customers. We try and live these values every day. Our strategy hasn't really changed very much. It's been very consistent over the two decades or more that we've been in business. We're focused on delivering steady, disciplined growth to create long-term value for our shareholders. Specifically, what that means is a tireless focus on customer service, maximizing the utilization of our facilities because that reduces per unit cost for our customers and improves Keyera's bottom line at the same time. Enhancing and extending our integrated value chain, creating more reliability and flexibility and profitability for our customers and our shareholders.
Finally, utilizing our assets to access high-value markets for the commodities we handle to benefit both ourselves at Keyera as well as our customers. As I said, our strategy has been very consistent over many years. In 2003, when we went public, we had the privilege of having the former Premier of Alberta, Peter Lougheed, as our chairman of our board of directors, and he stayed as our chairman until 2012 when he passed away. In 2011, he said this: "As one of the original members of the board, I have watched Keyera's business strategy develop, and I am impressed by the consistency of its execution.
Our success is dependent on the relationships we build with our stakeholders, and I am extremely proud of Keyera's track record as an engaged and responsible corporate citizen. Today, eight years later, I am just as proud of our track record and our team. Looking forward, we will continue to be focused on strengthening the capabilities and the culture that will build on that success. Our strategy has built a fully integrated business. Our three business segments, Gathering and Processing, Liquids Infrastructure, and Marketing, provide essential services with assets and capabilities that are difficult and expensive to replicate. Our competitive advantages include strong customer and partner relationships that strengthen our business and also provide ongoing opportunities for growth. As I mentioned already, our assets and our connectivity are attributes that are very difficult to replicate for competitors.
Over more than 20 years of investment, we have created a strong franchise that would take considerable time and money to replicate. Thirdly, we try and provide complete midstream solutions to our customers all along the value chain. We access high-value markets with the facilities that we have for the commodities that we handle, again, for the benefit of both ourselves and our customers. Finally, we are a safe, reliable and respected operator of facilities where we operate. Over time, those strategies have delivered very impressive financial results. Since our inception as a public company 16 years ago, we have delivered a compound annual growth rate of 8% in terms of dividend per share, and that's based on an 11% compound annual growth rate in our distributable cash flow per share.
I always emphasize that when we calculate distributable cash flow, we measure it after maintenance capital, after lease expense, after cash taxes. It truly is the cash that's available either to reinvest or to pay in the form of dividends. That track record has generated a 19% compound total annual shareholder return over that 16-year time period since our inception as a public company. I should emphasize as well, we always focus on per-share metrics, internally and externally in focusing on delivering shareholder value. That impressive track record is based on a long history of steady dividend growth, 8% compound annual growth rate, as I mentioned, which is based on the continued growth in distributable cash flow per share. That steady dividend growth is based on disciplined capital allocation.
You can see from this chart that we had some very strong years in 2014 and 2015. Even in the more recent years when the industry has gone through some significant challenges, our return on invested capital is still at the high end of that 10%-15% range. That's a track record that most of our competitors have a tough time matching. That disciplined capital allocation is ongoing today. We expect to be able to continue that track record of strong returns on capital and steady dividend growth with the projects that we have underway. The projects that we completed in 2019, the phase 1 of the Wapiti Gas Plant and the Simonette expansion, are already generating cash flow growth.
The projects that are under construction now, our Wildhorse terminal in Oklahoma, phase 2 of the Wapiti Gas Plant, and the new Pipestone Gas Plant, are all expected to be generating that 10%-15% return on invested capital by 2022. The KAPS liquids pipeline is expected to be generating at that level of return by 2024. What have we done for you lately? Well, over the course of the last 12 months, these are some of our accomplishments. We've operated our facilities safely. Since the beginning of 2018, we've had only one employee lost-time incident , and that was a fairly minor event. We're moving forward with our KAPS liquid pipeline project, which we announced earlier this year. We achieved record financial results for 2018 and for the last 12 months.
Our earnings per share were at record levels. Our distributable cash flow per share for 2018 was at a record level. For 2019, it's gonna be a little bit lower as a result of higher cash taxes and higher maintenance capital, still very impressive results in the environment that we're in. We have completed about CAD 1 billion worth of capital investment projects, including the Wapiti Gas Plant and the associated gathering systems. That's a photograph of those of us who were there to celebrate the opening earlier this fall. We've maintained our track record of steady dividend growth with a 7% increase in August, and we've secured the funding for our current capital program with the CAD 600 million hybrid debt offering in June. We won't need any new equity aside from the DRIP to fund the current organic capital program that's underway.
I'd like to take a minute now to introduce the strategic priorities that we have currently in each of the business segments. You'll hear more about this from our speakers throughout the rest of the morning. In our Gathering and Processing segment, our focus is on enhancing and extending increasing the competitiveness and the profitability of our assets. We will do that as we always do, through trying to enhance customer netbacks, increasing the utilization of our facilities and optimizing the portfolio. Dean Setoguchi will be talking about that a little bit more. In the Liquids Infrastructure segment, we are focusing on continuing to enhance and extend our value chain, increasing the connectivity capacity and the range of services that we provide, providing more services for the growing production of bitumen from the oil sands.
Finally, most of our investment opportunities in the next few years will be in the liquids infrastructure sector, and we are focused on continuing to focus on fee-for-service opportunities, building on our capabilities, and strengthening our competitive advantages. Brian Martin will talk a little bit more about that later this morning. In our marketing segment, which Jamie Urquhart will talk about, we continue to focus on accessing high-value markets for the commodities that we handle and maintaining the long-term effective risk management program that we have. Steven Kroeker will talk a little bit later about our financial priorities. Our short-term and long-term financial priorities are the same, continuing our disciplined capital allocation, preserving our financial flexibility with our strong balance sheet and payout ratio, and continuing our track record of steady dividend growth. Here are some of the messages that you'll hear more about this morning.
We will continue our disciplined capital allocation, generating attractive returns with the investments that we make. We will successfully execute and deliver on the program that we have currently underway. We are focused on increasing utilization across all of our facilities, enhancing customer netbacks, and improving Keyera's profitability. To that end, we are developing plans to optimize our Gathering and Processing portfolio to improve profitability in that segment. Our growth opportunities in the next few years will primarily be in our Liquids Infrastructure segment, and we intend to maintain a strong balance sheet, and we intend to deliver steady dividend growth. With that, I'm going to turn it over now to the newest member of our officer team, Nancy Brennan, who will talk a little bit about what we call sustainability.
Thank you, David. As David mentioned, my name is Nancy Brennan. I am the Senior Vice President and General Counsel of Keyera, and I'm the newest member of Keyera's executive team. I have been in the energy industry almost 20 years. Like many of you, prior to joining Keyera, I was very familiar with the strong track record of growth and the outstanding financial performance. I can say with every confidence of since joining the organization earlier this year, what I didn't fully appreciate, although I was somewhat aware of it, was the caliber and the depth of expertise in this organization, a very strong bench of a high caliber of individuals and just the consistent demonstration of the values that David alluded to earlier.
The culture is well-known, at least within Calgary, but I will say as someone who's just recently joined, it's been extremely impressive, and it permeates really everything that Keyera does. My comments are really going to focus, as was mentioned, on Keyera's approach to governance, social responsibility, and the environment, which is commonly referred to as our ESG approach. David earlier outlined our values, really the intent of this part of the presentation is to give you some insight into how at Keyera, we really believe that we try and live and strive for these values every day. As David mentioned, Keyera is really committed to responsible growth. A key feature of Keyera and a key measure of our success is that we are committed to operational excellence. In respect of our safety program, operational excellence is really the foundation of everything that we do.
In respect of safety performance in particular, we had zero lost time incidents in 2018 and only a minor event in 2019, which is outstanding safety performance. Our AEF facility, which you'll hear a little bit about later today, actually just recently celebrated its 25th year without a lost time incident. Keyera is also well-recognized within the industry. We've won numerous awards for our safe product handling practices. In respect of operational reliability, as you can see, both in respect of our gas processing facilities and in our NGL service facilities, our reliability is well over 90%. Keyera is very proud of its strong track record of corporate governance. Other than David, we have a 100% independent board, and they are highly engaged directors. They bring an average of 34 years of industry and professional experience to our board.
The composition of our board really reflects also the focus that we have on diversity of thought and experience. 33% of our independent directors are female, and we have a relatively low average tenure of 5.8 years, which really also exhibits the constant focus on renewal and bringing new perspectives onto our board. In respect of compensation governance, we have a 98% support of our say on pay or our executive compensation program over the last three years. That's the average level of shareholder support that we've received.
In respect of ESG in particular, that's really reflected in both our committee structure, which is comprised of audit, compensation, governance, and health and safety, and also just the regular conversations that happen at the board level, both in terms of strategy discussions and our ongoing discussions about enterprise risk management, which really identify any areas of concern and areas of opportunity for us. As some of you may be aware, Keyera is well-recognized both nationally and provincially as an employer of choice. We really do value collaboration and teamwork within the organization, and diversity and really bringing a questioning attitude to everything we do. Part of this recognition is the strong culture that exists at Keyera. We've outlined here what our cultural behaviors are, which is really just a codification of sort of the way that the organization organically exists.
It's really characterized by teamwork and collaboration, diligence, and as I mentioned earlier, just bringing a fresh perspective and questioning attitude to everything that we do. In respect of the environment, our approach is really based on these key principles. Sorry, this is the community investment. In respect to our community investment program, Keyera has a long history of both investing in and building capacity in the communities in which we operate and work. We've got four key pillars to our community investment program. They're both focused on identifying key areas of local need and addressing those, as well as supporting key initiatives within our communities that are directed at enhancing the economic and environmental well-being. In 2018 alone, Keyera donated approximately CAD 1 million to 150 different local organizations. We've also invested almost CAD 5 million in the United Way since our inception.
Keyera also encourages our employees to give generously of their time. We provide employees with two paid volunteer days per year. Last year alone, employees donated over 8,000 hours of their time, which was equivalent in value to almost CAD 500,000. In respect of the environment, our approach is really based on four key principles. Obviously, safe and efficient operations are key to our environmental approach and reducing our environmental impact. We're keenly interested in listening to our stakeholders, and we continue to do that in respect of all of our activities and the projects that we have ongoing. We're relentlessly focused on continuous improvement. The organization regularly engages in look-backs and seeks to learn from its experiences and the experience of others to continue to adapt our approach and improve it.
We're constantly having discussions to determine how best to align our strategy with our principle of responsible growth. Going forward in respect of environmental stewardship, we recognize that the interests and the views of our investors and our stakeholders are evolving, and they're diverse. Our approach going forward for the future is focused on four key principles, which are really interrelated. First is listening. Obviously, listening and learning from these perspectives. Keyera is a very stakeholder-focused organization. Obviously, we want to understand what areas of concern that our stakeholders have and how we can adapt our approach accordingly. Two, in terms of our action, we've actually initiated a number of projects and groups within the organization in respect of climate change, reducing emissions, environmental stewardship, and we'll continue with those task forces and groups that have already started and have great work underway and move those initiatives forward.
Excuse me. In respect of our approach in sharing our disclosure, we will be sharing more of our ESG story going forward. We focused over the last two years on increasing the breadth and the depth of our ESG disclosure. We've made great strides in that respect. The focus going forward will be for us to more broadly take the experiences and the perspectives we have and broaden and clarify our approach, including very transparently with our shareholders and other stakeholders. Finally, as David mentioned, we believe that the world needs more positive Canadian energy. We recognize the imperative of sharing the story with the rest of Canada and the world. Our focus will also include providing and supporting more fact-based education on Canada's ESG approach and the benefits of Canadian energy.
With that, I will turn our presentation over to Dean Setoguchi, our Chief Commercial Officer, who will speak about our Gathering and Processing business.
Thank you, Nancy. Good morning, everyone. My name is Dean Setoguchi. I'm the Senior Vice President and Chief Commercial Officer at Keyera. I've been with the company for almost 10 years. The first four were as a CFO, and so I am the second of three CFOs in the company as I follow David Smith's footsteps. Rest assured, we apply a lot of financial discipline in our company. Following that, I left the company for 18 months. I came crawling back on my hands and knees, and David gave me a role in the business group. I've been there for about six years, and I really enjoy my role now in building our business for the future. I should mention before I speak to these slides is that there's a couple of them in this section that are out of order.
All the slides are in your package, they're just in a different order. Talking about the gas Gathering and Processing, we have a very integrated business, and it all starts with our gas Gathering and Processing segment. It's where we get to first engage with our customers and understand the requirements and provide them with a service offering that fits their needs. Ideally, this means that we provide them a complimentary suite of services. That would include gathering and processing their natural gas for a fee, extracting their liquids, transporting them, fractionating them, and then storing them and terminaling them as well, also for a fee. At the end, when we market those physical products, we get to generate a margin. As those hydrocarbons flow through our system, we generate fees and a margin at the end.
This part of our business is the most competitive part of our business. Generally speaking, the barriers to entry are lower than our downstream liquids business. Our goal is to increase our competitiveness as much as possible. Most of our competitors in this space do not have the integrated network of assets that we have. When we bundle our services, it does provide us a competitive advantage. I just want to talk a little bit about how drilling has evolved in the province, and some of you may have seen some of these from TransCanada slides, but if you look back to 2000, you can see that the wells were very widely dispersed, and most of them were vertical wells.
When you move forward into 2007, you can see that there's a more distinct line of drilling along the western part of the province. Again, still most of the wells are vertical wells. When you fast-forward into 2017. Again, this is in a much slower commodity price environment in Alberta, you can see where all the wells have now gravitated to the most economic part of the basin. Again, that's on the western part of the basin. You can also see now that most of the wells are horizontal wells, which are the dark dots. When you overlay our gas Gathering and Processing assets, we classify them into the north and south. You can see that both are very strategically situated along this fairway. We provide essential services. That's right from production to end markets.
In this process, we aim to capture as much value as possible. The more value that we capture, it gives us the flexibility to competitively incent more volumes to our system and enhance our profitability. A lot of that value is in the liquids. As you just saw, our facilities are located in liquids-rich areas, and we have extraction capabilities at all of our facilities and the efficient means and infrastructure to process and get those NGLs to market. We also aim to achieve the highest value prices for those NGLs so that we maximize the net backs for our producers. Our strategy is all about increasing our competitiveness and the profitability of this segment. Really, it's about helping our customers. Our customers have faced a lot of hardships over, especially the last five years with the downturn in commodity prices.
With that, we have to be part of the solution, and that means helping to enhance their netbacks. The healthier they are, the more active they'll be behind our facilities, and more volumes will come into our system and generate higher profits. We're focusing on our customer netbacks, and as part of that, we have an optimization project that I'll be talking about later. I want to make it clear that most of our initiatives are all centered around factors that are within our control, and that means lowering our operating costs and improving our overall utilization, so that we lower our per-unit costs. When we do that, again, we're more competitive, and we can more competitively attract volumes into our system and make us more profitable.
Having said that, there's reason to be more optimistic about the future of natural gas prices in Alberta. A lot of that is happening because of changes on TC's system. First of all, TC is allowing interruptible gas to flow into storage now. What we've seen, especially in the last couple of summers when we've had maintenance outages, natural gas has been trading at a zero value. With this new policy of allowing gas to flow into storage, that should help stabilize the AECO gas prices. On top of that, we're seeing a lot of export capacity getting built over the next three years, both to the east and also down to the west and into the U.S. Inter-Alberta demand is expected to increase by about 1.5 Bcf a day.
About 1 B of that is related to coal to gas switching for the generation of power. On top of that, industrial demand is expected to increase by about 0.5 Bcf a day. When we look out into the future, into the middle of the next decade, we're excited to see the first LNG development come online off the West Coast of Canada. That will require about 2 Bcf a day of gas to feed it. We hope that this is the first of many LNG developments into the future. When we look at what that does to our AECO gas prices, if you look at the chart on the bottom right-hand side of the screen, this illustrates the basis differential between AECO and Henry Hub.
If you look at the past 18-24 months, there's been a tremendous amount of volatility, which means that for extended periods of time, AECO's traded well below CAD 1 per Mcf, and again, it's caused a lot of hardships for our producers. When you look at the forward curve, it's much flatter, and it trades in a much tighter band. Again, it's much more supportive of stronger AECO prices and stabler AECO prices. Over time, we believe that this will translate to more activity behind our facilities. The silver lining of our downturn in Western Canada over the last five years is that it's made our industry much more competitive. Our producers have been very disciplined to drive down costs, and some of that has been through the use of technology.
Our basin is the lowest cost supply basin, and we can compete anywhere in the world. We just need additional egress, and we are starting to see it now. With that, I am going to shift and talk about our north region. Our north region is centered around the Montney and Duvernay developments. I thought it would be great to start and where you can look at the economics. We have three different price bands, and the middle band, the gray band, is the 55 WTI assumption, which is where we are essentially today. You can see that these plays have very robust economics under this economic scenario, and especially the plays that are situated between our Simonette and our Pipestone facility. That's a very liquids-rich fairway. That's translated into a lot of growth in the Montney in Alberta, as you can see here.
There's certainly a lot of resource in place. We certainly see the potential for a lot of growth in the future. We're very well situated to benefit from that activity. Again, still staying on the northern part of our portfolio, we have three sites. Our Simonette facility, which we recently expanded. Not only did we add capacity, we also added more enhanced extraction capabilities for liquids. We brought our first phase of our 150 million a day Wapiti facility on stream. The second phase, an additional 150 million a day, will be brought on in 2020. In 2021, we'll have our Pipestone facility online, which is about another 200 million a day of capacity. We are very well-positioned to provide all the essential services to develop Montney gas. These requirements are different than the legacy gas in the area.
On top of that, a lot of the value is in the liquids. We have efficient NGL egress, and that will be with our KAPS Pipeline that we connected to these three facilities in 2022. They'll deliver those liquids right into our hub at KFS in Fort Saskatchewan. Longer term, our goal is to interconnect all three facilities. When we do that, it helps our customers because we will be able to provide a more reliable service and provide them more flexibility as to where they can bring their gas into our system. For us, it helps us enhance our profitability because it helps us more effectively utilize our capacity. Again, when you look at the economics in the Montney, a large percentage of the value is generated from the condensate.
You need the facilities to handle that condensate, and we're building a significant amount of that. We'll have about 90,000 barrels a day of condensate handling capacity by 2021. As I mentioned, with our KAPS Pipeline, we'll have direct access right into the condensate hub, which is ours, which is located between Edmonton and Fort Saskatchewan. Typically, the Montney gas in this area has a higher sour content. Again, that's relative to the legacy gas in the area. You need the facilities that can process that type of gas. We'll have about a Bcf a day of this type of sour gas processing capacity, again by 2021, when our Pipestone facility is online. We'll also have acid gas injection as well capabilities. Again, that's the most environmentally friendly way of disposing of H2S.
On top of that, we have extensive experience in processing sour gas, both from a safety perspective and a reliability perspective. Another service that's required for the Montney is water. There's a lot of water that's used for fracking, but also a lot of formation water is produced with the production. With that, again, we are increasing our water handling and disposal capabilities, and we'll have about 55,000 barrels a day with our Pipestone facility once it comes online. Long term, we are working on solutions where we can find more environmentally responsible means of handling that water, and that will include recycling. I'm just going to switch over to our South region. A lot of our legacy assets are located in the south part of our portfolio, and this is really in West Central Alberta. It still has great geology.
It's a liquids-rich area with multi zones. The advantage for producers in this area is that, again, there's a lot of infrastructure already in place with capacity. A producer can drill and bring their wells on stream and tie in, usually it's a short time because we have extensive gathering lines in the area, and generate a return on their capital within a few months. Again, that's a very attractive future, and they usually don't have to make huge commitments to do that. We have an interconnected gas facilities, as you can see, enhanced liquids extraction, again, to capture the value of the liquids. We have efficient egress with our Keylink pipeline system, which gathers those NGLs and transports them to our fractionation at Rimbey.
We like to show this graph because it really illustrates how resilient the gas is in the southern capture area. This dates back to 2010. This graph is prepared as if we owned all of our facilities 100%. The only adjustment is for Alder Flats Gas Plant, which we built and brought on in 2015. Through that time period, you can see that natural gas prices on a relative basis have declined substantially over the last 10 years. Has the oil price, WTI prices, which is a proxy for the absolute price of NGLs. Commodity prices have tanked significantly over that period of time. Especially over the last five years, you can see again how flat that production curve is. The sharp dips represent when we've had turnaround maintenance outages.
Again, you can see the production responds quite quickly. There's a slight dip in the production profile, the volume profile from the summertime. Again, that's when gas prices were trading at well below CAD 1 for extended periods of time. A lot of that gas is now back online now today. The reason why the profile of the volumes is flatter too, is because this is a more mature area than the tight gas plays like the Montney and Duvernay up in the north. We've been talking about our optimization program in the south, and really what it's aimed at is to improve our overall competitiveness and also our profitability of this segment of our business.
When you look at this portfolio, we have 14 gas plants that have over 2 Bcf a day of capacity, but only half of that capacity is being used today. We are incurring significant redundant costs associated with operating these many plants. Our strategy is to redirect the gas to our most efficient facilities. That means the ones that are the lowest cost to operate, the ones that have the best liquids extraction, and the lowest carbon intensity. We'll reduce our per unit operating costs. We'll be able to more competitively attract volumes into our system and enhance the profitability for Keyera. We want to make sure that we preserve some capacity for recovery, because we do believe there's another day for natural gas. When that happens, we want to capture that economic price.
We expect to have more definitive plans with this program towards the middle of next year, and then we will implement our strategy. It'll take several quarters to work those extra costs, redundant costs, out of our system. We've already started that with our Gilby consolidation already, where that gas has been redirected to Rimbey. Again, just as a reminder, we have very good geology in this area. It's multi-zone, liquids risk geology. Over time, there will be a lot of hydrocarbons that will be produced. If you look at the economics, and again, in this scenario, the top bar represents a CAD 2.35 AECO gas price, which is the range of where AECO's trading today. You can see that there's some very robust economics.
Again, when you combine that with the fast return on capital that you can get in this area, it's still an attractive place to drill over time. Our goal is to enhance the overall profitability in this area, again, by providing competitively priced services and also achieving the highest prices for the natural gas liquids. I should also mention that one of the stack plays in this area is the East Shale Duvernay, and this play is developing right in the heart of our infrastructure in this area. There's been some very attractive wells that have been drilled by a number of producers. As this plays develops, again, we should be able to benefit from additional volumes into our system. When we look at what to expect over the next five years from this business segment, we're very excited about it.
We want to achieve success with our Montney build-out, so we have to complete the phase 2 of our Wapiti gas plant and also bring our Pipestone facility on stream as well. It'll take a couple of years to ramp up the volumes once those facilities are online. On top of that, we're also going to access a lot more liquids, which will support the downstream part of our NGL business. On top of that, as I just talked about, we're going to complete our optimization program in the south. Again, we're going to reduce our operating costs, increase our utilization, and increase our overall competitiveness to attract volumes into our system, enhance profitability. We're going to continue to look at opportunities to increase our liquids recovery because, again, this supports our downstream NGL business. We're also going to selectively pursue growth opportunities on a very disciplined basis.
What that translates to, so if you go back to 2014, you can see how much cash flow we generated, which was about CAD 220 million. We made some investments over the last five years, and we've increased that to almost CAD 290 million, and that's presented on a last 12 months basis. When we fast-forward into 2024, we expect to achieve significant growth into the future, and that's with our Montney build-out, our portfolio optimization, and other services that we're providing. This assumes no significant investments beyond what we've already sanctioned already. With that, I'll turn it over to Brian Martin to talk about our liquids infrastructure. There you go.
Thank you, Dean. That gives you some insight into the discipline we have as a company. We were told to go up from the right and exit from the left, so it's awkward, but hey, that's our discipline. I'm going to talk to the liquids infrastructure side of our business. I've been working within the business development team here for about 12 years now, and it's been a tremendous experience. It really has. It's been very rewarding to advance opportunities like we have with our diluent system, our frac and storage, Norlite, and BTT, and then also now, and very satisfying to see the positive results they're delivering for our company. Also exciting as a business development guy, to see the opportunities that we have in front of us, and they're really tremendous and really weave well with our existing business.
I want to spend a few minutes just looking back over some of the keys to our success. One, without a doubt, has been the positive relationships that we've been able to develop with our customers. The focus item here for us really has just been to listen to them. It's as simple as that. Off of that listening, we've really been working hard then to try to satisfy their needs and wants, both commercially and physically. We've tried to do that with an end game of a win-win arrangement for us. Served us very well, in particular with advancing opportunities like our diluent system and then most recently, getting KAPS across the line. Again, with this win-win mentality, it's also led to frequently repeat business with our customers and in particular with the likes of Imperial, Suncor, and CNRL.
We've been able to do additional business with them on services such as our diluent system, frac, solvents, and KAPS, most recently. Companies that we strive to do more business with and I'm sure you'd like to see us doing more business with. Along the way, we've also entered into many joint venture partnerships, and I think this has really positively differentiated ourselves in the midstream space. Our philosophy here is really simply just been, if the sum of the two parts coming together is better in terms of providing a solution than what each of us can individually do, then why not? We really haven't been shy about that at all. Still looking back just quickly, David and Dean have touched on this, really another key to our success has been to advance infrastructure solutions really on an integrated path.
Again, it's really been helpful for us, as well as really weaving our business together. Because of that, in many instances, a barrel of a customer's product then will be handled at many of our facilities, and in that case, we're able to collect multiple fees. Today I'm going to talk to many of those assets. First, just quickly pull you back to David's slide where David laid out the priorities for the Liquids Infrastructure team. They are to increase NGL connectivity, capacity and services, to add to the business we have serving the oil sands, and then drive complementary fee-for-service growth. Liquids Infrastructure starts at the back end of our gas plants, and I'm just going to talk to a few of these here first. Really, the NGL pipelines is, again, the start of this.
NGL pipelines for us and for our producers provide a competitive and a safe means by which we can move NGLs from the field to the market. The two field gathering pipelines that Keyera is involved with are the Keylink pipeline and KAPS. I'm just going to talk briefly to Keylink here with you today, and then I'll talk a little bit more on KAPS for you. Keylink, as Dean noted, really integrates our West Central gas plants with our fractionation at Rimbey. It's eight of our West Central gas plants, if you're counting there. Again, this project was completed in 2018. It brings us a nice fee-for-service business as well as commercial margin opportunities. Also should be noted that it keeps trucks off the road. A lot of these barrels were previously moving around the province on trucks.
The pipeline solution was very eloquent in that manner. KAPS is a project you're certainly all familiar with. Similarly to Keylink, it integrates our gas plants with our fractionation. In this case, it's our northern plants with our fractionation and storage in the Fort Saskatchewan area, which is our key NGL hub. It's being advanced as a 50/50 joint venture with SemCAMS. Again, most of you will be familiar with this. It consists of two segregated lines, one for NGL mix, one for condensate. You can see that the pipe is running really right through the heart of Duvernay and the Montney. These zones, for the most part, are stacked along a good portion of the route there. What's important there is that they're very liquids rich.
With the Montney really leading the way, I think you all hear lots about the Montney, I'd say it's for good reason. It's really a massive deposit. I like to call it a beast, but it's a massive deposit that really kind of compares favorably with the best there is in North America. Also along here, the producers' drilling results continue to really meet or exceed expectations with respect to liquids recoveries. We feel very confident that the capacity that KAPS is bringing to the market is needed. I'm going to touch on some of the key attributes for KAPS. The first is it will generate strong fee-for-service cash flows and returns for us. Our initial contracting has secured shipper commitments with an average term of 14 years.
They all have 75% take-or-pay associated with them. We're expecting starting in 2024, to generate a strong annual return on capital of between 10% and 15%. I'll also note it's highly desired. The gas producers, petchems, oil sands producers, all wanted competition in this space, and KAPS is going to provide that for them. Also want to highlight as Dean noted as well, condensate is the single biggest driver for a producer's economics in this basin. KAPS will provide the most direct shot from the field to where the end users are and where the demand is. That demand is within our condensate system, largely in Edmonton, Fort Saskatchewan. Our customer base, the demand that we have, the liquidity that we have in our diluent system, will really positively differentiate KAPS, and we will look to leverage that benefit.
With respect to the joint venture partnership benefits, the Keyera and Cenovus plants will certainly logically be integrated into KAPS over time. By 2022, when we start up, the two of us will have a combined nine gas plants operating along the route with a processing capacity of 1.25 Bcf a day. That will certainly benefit us. Again, it's a liquids-rich area, the more gas, the more liquids. KAPS will also provide us upstream and downstream benefits. I'll touch more to those in a second. Lastly, it'll provide us, as Dean and David have both mentioned, it'll provide us a platform for growth that really can be substantial. It's exciting, can be substantial, and will be really well integrated with our other existing business. Our upstream and downstream benefits, KAPS will provide us with a fully integrated infrastructure solution for this part of the basin.
It's very important. There's only one other party that has that. We will have the ability to provide bundled or integrated services solutions in this infrastructure space. We'll have gathering and processing, liquids transportation, fractionation, storage, terminaling, and again, really provide us with a competitive advantage in this space. KAPS will also provide us with more security of liquids for our downstream infrastructure. Gives us a clear path for securing frack volumes for KFS as well as condensate for our downstream diluent system. Lastly, it also provides additional direct feedstock options for our AEF facility. As for providing a springboard for growth, a big part of the growth that you'll hear from Keyera over the next five to seven years will likely hang off of the front and the back end of KAPS, and particularly the back end.
Dean's going to touch more on those downstream opportunities later. With respect to KAPS itself, we're working collaboratively with NorthRiver, an affiliate of Brookfield, to really unlock the value of Northeast B.C. reserves. We're also engaged with petchems to pursue and look at providing an ethane plus transportation service. Exciting and interesting opportunities for both of us. To close out KAPS, we love this project. We really love it. We think that it's going to be a tremendous success story for us. The first part, though, is we have to get the thing in the ground, we got teams working feverishly back in Calgary, the engineering and the regulatory and stakeholder discussions and everything. Our goal there is to have us begin construction in the back half of next year.
Following along on the mix side of things, next up is our fractionation and storage business that we have. We are one of four parties with fractionation and storage in the greater Fort Saskatchewan area. At KFS, we have two fractionation units that total 65,000 barrels a day of capacity and currently 15 caverns that add up to having 15 million barrels of capacity currently. On top of that, most of you would be aware that we have an ongoing cavern development program that will see us adding one cavern pretty much every year, at least for the next three years. Key messages around this part of the business are shown behind me. It's a high barrier for a new entrant to come into this space is one, the second is, our business has been strong and our utilization has been strong without KAPS.
With KAPS, we certainly feel like and expect incremental capacity will be required. Again, just expanding a bit on these messages, I'll touch on three of the barriers for a new entrant in this space. The first is around connectivity. The connectivity that we've developed over time is tremendous in a very congested area. This Edmonton, Fort Saskatchewan area, as you probably know, is hugely congested. We have tremendous connectivity then both upstream and downstream. Upstream for the feeds into our fractionation and then downstream for the spec products and movements out to the market. The second barrier is cavern storage.
Caverns really provide a critical service to the fractionation business, and it's likely intuitive to most of you that they provide that benefit. In terms of the market flexibility for the propanes and butanes and the timings of the sales and stuff, that's probably intuitive, but what might be less so is how critical they are in providing and ensuring takeaway reliability for producers in their upstream field operations. No matter what's happening downstream in terms of operational challenges or logistical challenges, those caverns ensure, basically smooth that out and make it a non-event and ensure that the producer's production stays on stream. Very important for them. The long and short when it comes to caverns, I'd say Keyera and other operators in that greater Fort Saskatchewan really are light years ahead of any other new entrant coming into this space.
We have the land, we have the salt under the land, we have the rights to mine that salt. We have the water. We have the brine disposals. We have the brine ponds. We have ejection pumps. We have economies of scale of multiple caverns. You get the gist, but it's just a tremendous competitive advantage that we have and a tremendous barrier to overcome. The third barrier is really it's just not getting any cheaper or easier to build out infrastructure. We have an existing operation now that can provide service, a competitive service now, and not have to wait three years to build the infrastructure. I suspect you hear constantly, and we see it for sure, there's costs and difficulties in building new infrastructure. Again, we have that infrastructure in place today.
Those are the three barriers I thought I'd highlight for you. With respect to the need for incremental fractionation in storage, you've heard from David and Dean that we feel like we're turning a corner as an industry here, producers aren't going to start to realize those better net backs immediately, but they're going to start to gain line of sight, we feel like, to better net backs. It's for a lot of the reasons that the teams mentioned here already with the TC Energy bottlenecks, LNG on the horizon, a PDH or two, more LPG export facilities, strong condensate demand. All these things are going to, we believe lead to the producers having a line of sight to better net backs.
In addition to that, third-party data would suggest that incremental fractionation will be required in this basin, and we feel like we're in a very good position to earn a good share of that business. We included this slide just to show you some of the land and where we have room for incremental growth beyond KFS. KFS is great, but it's starting to get congested as well. Part of what we're challenged with then, I just talked about the barriers for a new entrant. We had barriers and have barriers to overcome to actually be able to continue to grow ourselves out here. We really feel like we've, to some extent, cracked that nut with the barriers that we've knocked off here. We've got excellent connectivity between KFS and out to that 1,290-acre parcel. We've got lots of pipelines running through there.
We got the salt rights under a good portion of this land. We got good rail access. CN has rail just to the south of that 1,290 acre parcel. Good highway access for trucks. It's all zoned heavy industrial as well. In that 1,290 acre parcel, zoned heavy industrial. What that means for us is that it's very possible for us to add process and more cavern infrastructure. We note for you as well the routing of KAPS. KAPS is snaking through that land, and so it's not yet, but at some point we hope to be able to talk about some business here and how we're leveraging that land into a tremendous piece of business for us. It's not yet, but hopefully someday.
I'm going to shift to the oil sands side of our business then here now, and a few key messages are shown for you on this slide. The first is we are the leading provider of diluent services in the Edmonton, Fort Saskatchewan area. Over time, we've built out the system and have added infrastructure that really kind of can hit the mark for everything that the producers want and need in terms of services. Second is we're poised to capture additional diluent business and accommodate that growth within the infrastructure that we have. The third is we will continue to look to leverage our strong customer relationships, strong and trusting customer relationships, into other product services, much like we've done with solvents and most recently, the sulfur business. Our customers, this slide shows some of them.
Others are bashful about showing their names and logos in the marquee lights, so we don't have them all here, but here's a few. It's safe to say, though, we have business with pretty much all the oil sands producers as well as the diluent traders. With many and most of them, we have long-term services arrangements that include take or pay, fee for services arrangements that provide transportation, storage, and in some cases, rail offloading services. I'll note, as I'm sure you are, that many are great counterparties to deal with. This next slide then shows Keyera's rough market share of the diluent business in the Edmonton, Fort Saskatchewan area. Takeaway here is from a transport perspective, we're touching between 55% and 60% of the oil sands demand for diluent. From a storage perspective, we provide between 65% and 70% of the business. Good numbers.
We're certainly proud of them, we continue to try to aggressively grow our market share in that respect. Now I'm going to hopefully wow you with a progression slide of our condensate system over time. We'll see how this works out. It's taken us about 10 years to build out the system and all the ins and outs and the adding of infrastructure that we've done. Before you see these flash through, I'll just note that about 11 years ago, we set out to provide services to a growing industry need around diluent. It started with the Imperial Oil's Kearl contract for us. Over time, we've really had a consistent goal of adding connections and then also adding customers. You can see some of the ins and outs as I go along here. See Norlite come on, that's our joint venture with Enbridge.
South Grand Rapids, more connectivity. KAPS, as I mentioned, will come into the system. I couldn't get the fireworks and the smoke into here for that. Hopefully that kind of wowed you. The takeaways here really for you is that it's a high barrier. To compete, it's a very congested area. We have capacity to grow. That South Grand Rapids Pipeline and some redundancy that we have with the shipping pumps really allows us, and in Norlite, allows us to incrementally add volumes without much expenditures of capital. Again, we can really provide the customers what they need and want. I just want to touch a little bit on that and expand a little bit on that last point and provide you with some things to consider.
If you're a customer on our system and you want supply, you can get supply from Southern Lights, from Cochin, from any of the fracs, from Pembina CDH, from Northwest, from rail offloading, and soon KAPS. Tremendous flexibility there. If you're wanting to deliver volumes out to any of the oil sands projects and on any of the long-haul pipelines, you can hit Cold Lake, Inter Pipeline's Polaris Pipeline, Access Pipeline, Norlite Pipeline. Again, tremendous flexibility in that regard. We have a competitive fee structure on the system. We're in the ground now, and so we have a strong position to be able to compete. On the storage side, again, it's probably intuitive to you that the market flexibility that comes with having the cavern storage, but also, it really serves as insurance for the oil sands operations.
Those companies have spent CAD billions on their operations, it's so critical that it not be interrupted because of diluent. No matter what's happening upstream in the diluent chain of things, operationally or logistically, those caverns provide the insurance that those oil sands operations need. Also, liquidity for our customers. Our customers are trading more than 1 million barrels a day on the system, we're moving more than 400,000 barrels a day, that's paper and physical trades on the system are tremendous, it allows our customers to get in and out of positions very easily. Operational flexibility. The above-ground tanks that we have at our Edmonton Terminal, our customers love these tanks. What they've encountered since day one and what we've had to deal with as well is the unratable nature of intra-day business.
What I mean by that is, the volumes almost on an hourly basis coming into the system aren't matching up with the rates and the hourly volumes that are wanting to go off the system. The tanks really provide this balloon effect on the system that just, again, smooths that out and makes it a non-event. Hugely valuable, the customers absolutely love them. Operational reliability and capacity. Again, South Grand Rapids and the shipping pumps, I mentioned that already, but we have capacity to grow there. This next slide shows a view on the bitumen and diluent demand growth. For all the reasons just mentioned, we believe on our Edmonton Fort Saskatchewan system as well as on Norlite, we're in a good position to capture a good share of this growth.
I'll emphasize again one more time that we can accommodate a lot of that growth without spending a lot of capital. This has been the case with some of our recent adds in the Cheecham area that we've been successful with on both systems. That's all I was going to talk to with respect to specific assets. I'll start to wrap things up then now with pulling things back a little bit to David's slides on the priorities. The deliverables are shown behind me here, but you can expect from us over the next five years then to have success with KAPS, both commercially and with respect to project execution. Very confident in that and looking forward to getting KAPS on stream. Adding fractionation and storage, we expect to need it.
Gaining incremental business with oil sands producers, both into our condensate system as well as with other products. We'll look to leverage our strong, trusting customer relationships to help in that. Growth that is integrated and in the wheelhouse of what we do well. You've heard that a big part of the growth for the company will come from the liquids infrastructure side of the business over the next three to seven years. What has liquids infrastructure meant to us as a company then? The contribution is growing from CAD 189 million in 2014 to a 12-month trailing total of CAD 370 million. Pretty much 100% growth in five years. The biggest contributors to that has been our frac and storage. Our condensate system, Norlite and BTT.
Over the next five years, we have line of sight to opportunities that should have us on our way to possibly doubling the cash flow again. Those opportunities will include KAPS, possibly more fractionation and storage, possible expansion of BTT, Wildhorse, and some of the other opportunities that'll hang off of KAPS. Dean will touch on some of those. What gives me confidence in this, it's the team that I have behind me. I have a tremendous team back in Calgary that I'm very fortunate to work in a fantastic group. They're driven, they're creative, and have a genuine desire to find win-win arrangements. We will get it done. Thanks for listening and taking the time today. I'm going to pass it off to Jamie Urquhart now, who will lead you through the important and valuable marketing side of our business.
Excellent. Coming up to the right side. I love this slide. I want everybody please to remember this slide. Good morning, everybody. My name's Jamie Urquhart. I'm Keyera's Vice President of Marketing. I've been with the company for 15 years. As with Dean, it's a little bit of a running joke, I haven't had a contiguous 15 years. I was with the company for the first 10, since its inception, out of Gulf Canada Resources. Took a brief hiatus for not 18 months, but seven years. You can imagine the lunch that I had with Dave, asking to come back after seven years. It's a little bit more challenging. I put on my best marketing expertise to do that. I've been back now for five years, and in the last year, I've been in charge of leading our marketing team.
I'm an engineer by trade, full disclosure. When I heard I had the opportunity, and I can't speak for the people that I lead, but there's one individual that's in presence today, so you can go up and ask him, but what their reaction when they heard that the Vice President of Operations was going to be in charge of the marketing group. From my perspective, it's been extremely enriching and positive experience for me personally. Hopefully I've brought some additional things to my group that they similarly see as positive. The thing I've been most impressed with is not only the creativity, because I've seen that over the last 20 years of the organization, but it's really the discipline. You hear that word a lot in our presentation today.
I want people hopefully to also remember, when you go away today, that discipline is a big part of the Marketing team as well. Okay? So, you've seen this slide. The Marketing's on the back end. We're more on the sales side with our customers. But really the relationship between Marketing, Gathering, Processing, and Liquids Infrastructure is very symbiotic. From the perspective of the hard assets, the fee-for-service assets, they enable our ability to find high-value markets. Without them, we would be just any old marketing shop in town. But the fact is we're not. We have those assets that we utilize. But in addition, on the flip side, Marketing allows us through finding those highest value markets to have our customers view Gathering, Processing, and Liquids Infrastructure. Those are higher value services that we provide because of that integrated offering that we provide. Okay?
The strategic priorities for marketing, as David had alluded to, is access to those high-value markets. I've done this presentation on a dry run many times. I feel like I'm repeating myself, but these are important words to repeat. We're accessing highest value markets for our customers and for our shareholders, and we're also maintaining that disciplined, effective risk management program to ensure that we're locking in the margins for the company and for those customers. What commodities do we touch? We touch all the NGL commodities. Also we touch iso-octane, which is an upgraded product of butane, and it's a differentiator for us that we'll talk about.
We won't speak much about specific value chain on the ethane side, other than to say that it provides a significant contribution to the company from a fee-for-service perspective of us extracting and transporting ethane on behalf of our customers to the petrochemical industry in Alberta. I think Dean's going to speak to some opportunities that we see on the ethane side in his further comments. How does marketing create value? First and foremost, it's really underpinned by superior customer service. Superior customer service in my team's mind is, it's not just price. It's ensuring that we're delivering on the services that we've committed to deliver on. This year, we've been able to do that in a very meaningful way. I have the opportunity because I'm the new leader, I hear lots of feedback from our customers.
I met a couple customers yesterday, and the feedback that I hear is always very positive, and it's not always because we give the best price, and we do often, but it's because we give the best service. One of our values is accountability and responsibility. Every once in a while, things don't go perfectly. Railroads go on strike. Facilities unfortunately have issues.
This year, we've been able to deliver on what we committed to our customers, and that's extremely valuable to our customer. Of course we buy and we sell NGL products, and we do that by leveraging and utilizing our hard assets, our fee-for-service assets in the form of custom fractionation storage, logistics terminals, that's rail and truck, but it's also 3,500 leased rail cars that provide the flexibility to be able to hit whatever market is available to us in North America, and now with export terminals, offshore markets as well. We utilize service providers on the rail and the truck and the pipe side. We have strong partner and customer relationships, and we have 20 years of expertise in dealing and finding the highest value in North America. It's all the umbrella of risk management.
Risk management to ensure that we're retaining the value of inventory and that we're also locking in margins when it makes sense. Okay. What we don't do is we don't do speculative trading, and we don't take frac spread risk. That all equates into creating value for the company, and the value is quite impressive in my opinion. CAD 1.1 billion over the last five years of contribution of free cash flow to this organization. That's been used to fund our capital growth program in this organization. I was hoping to take a little bit of time, and I'm coming over to the other side of the screen. I was given some feedback yesterday that I was much more comfortable over here, and I'm a superstitious engineer as well.
I'm going to speak to you now over here, but on the propane side, we'll speak a little bit on each commodity with respect to the uniqueness of the value chain. I made a comment to one of my direct reports who coincidentally is in charge of the propane book. I said, "propane feels to me like it's sort of the ugly duckling of all the commodities." You can imagine the reaction that he had with me when I called it the ugly duckling. I've really come to appreciate the opportunities on the propane side of our business, looking forward. We've got great assets with respect to storage and the logistics assets that we talked about, the rail cars and whatnot. The next slide that we're going to talk about is more about where the markets are headed.
Given the fact that propane in North America is seasonal, the storage and the flexibility to be able to hit those markets with the logistics is imperative to being able to find those highest value markets. Once again, we use the risk management program to lock in and retain the value of the inventory. This is the slide I was alluding to. Tend to sometimes get ahead of myself. Right now, the majority of the pricing of propane is off of indices. We've got a strong local market. The local market is growing in the form of solvents and also in the form of PDH that's being built in the province of Alberta.
We're also starting to see some access to foreign markets with respect to some export terminals that were built several years down in the Gulf, but more specifically on the West Coast to be able to hit the Asian market. What we're seeing is we're seeing a more balanced, in my group's view, ability to access those different markets. Why that's key is because you never know when one market's going to give you something that you can take advantage of. Those opportunities, if you have the right assets and you have the flexibilities, you can capture a significant amount of value for your customer and for our shareholders. That's propane. On the condensate side, Brian did a fantastic job. My picture here doesn't transition. We don't have enough time for that. Really, it's an industry-leading condensate system.
We touch the majority of the barrels that ultimately go up into Northeast Alberta to the oil sands. That's really the big differentiator for customers that do business with Keyera on the condensate side. They have the access to the highest value market because they are dealing with the highest flexible, touch the most elements of the marketplace. The other asset that we have that is also very complementary and unique to Keyera is our Alberta diluent terminal. The Alberta diluent terminal, what it allows us to do is buy volumes opportunistically throughout North America. Whenever we see an opportunity to buy, forgive me, a distressed barrel or a lower-priced barrel, we'll purchase it, we'll rail it back into the Alberta market, we'll introduce it into that condensate system.
Tend to be very attractive barrels in that they're lighter and more attractive in the eyes of the oil sands producers. Okay, there's butane. Butane, really, the step change for us was obviously the AEF acquisition in 2012, an ability to then upgrade the value of butane into iso-octane. We've also done a lot of work within our butane system in Edmonton to be able to tap into blending opportunities, whether that's refineries or for other customers serving the oil sands. Once again, we have assets that differentiate Keyera in the eyes of our customers from a butane perspective. Let's touch a little bit about iso-octane. It's a very significant contributor to the marketing margin in Keyera. We envision it's going to continue to be. I'm not sure if everybody's aware, but 1.4 units of butane produce one unit of iso-octane.
The price of iso-octane is basically a premium off of gasoline. Gasoline is priced off of a WTI plus an RBOB premium. Both WTI and RBOB are very tradable indexes. As a result of that, our risk management program, very disciplined in being able to lock in the margins off that component. Not so much on the iso-octane premium side. We'll maybe spend a few minutes just talking about our view on iso-octane premium. One of the things I think everybody's aware, I would hope, that AEF has been a significant contributor to our results in 2019. Often people assume that that's primarily due to the input cost, the feedstock of butane. On the flip side, we've also seen some very strong pricing on the iso-octane side of the thing. It's a combination of both.
Our expectations on the butane side is obviously the pricing that we saw in 2019 is not going to be the same pricing going forward. We can certainly talk about that in the break of where our view is on butane. Our view on iso-octane is extremely bullish. The right-hand side of the slide is to help people get an appreciation or hopefully maybe you know this already around some of the fundamentals that go behind the demand and pricing of iso-octane. Let's start with gasoline. At the end of the day, if there's no gasolines to blend with the iso-octane, we don't have a market for iso-octane. Our view and third-party views is that the demand for gasolines coming off the refineries in North America is going to continue to be very strong.
The demand on the North American continent is going to be coming off slightly with the electric vehicle introduction. The reality is that the majority of North Americans love their vehicles, and they love the internal combustion engine as part of that vehicle. Also with respect to some of the refineries, with regulations in Latin America, and in the Caribbean, what's being forecasted is that there's still going to be a strong demand off the back end of North American refineries to make gasoline into the export market. Most third-party forecasts would have you see a flat gasoline production profile in the 5-plus year term. Okay? That's important because once again, this iso-octane is an octane additive to gasolines. The other thing that we're finding is that gasoline's coming off the back end of the refineries for some regulatory requirements on the sulfur side, benzene side.
Don't want to get into too much detail, but we're seeing that the octanes of those gasolines are actually reducing. In order to meet the specifications of gasoline, we need more octane additives to be able to get to those specifications. That's driving a demand for more octanes. Okay. Also an expectation that potentially North America gasoline specifications are going to be more stringent, similar to Europe, whereby gasoline octane requirement is going to be going up as well, once again, increasing more demand for octanes. Then we look at iso-octane against its peers, which is an alkylate, a reformate. It's a naphtha. Iso-octane has the most desirous properties of all octane additives from the perspective of, has the lowest RVP content or vapor pressure, and it has the highest octane content. Okay.
When we pull all these things together, our view and most views of others that we talk to in the space is that iso-octane will continue to have a very strong demand going forward and similarly will be priced very strongly as well. Okay? The next slide is really to start speaking about our U.S. strategy. This slide was intended to illustrate that we've been in these markets for the last 20 years. We've been in the Midwest and Conway market, selling both propane and butane, Gulf Coast market, in Mont Belvieu. Also we've been very active in the Bakken with respect to being able to access butanes that whether we pull into Alberta or we pull back into markets in the U.S. We also will hit niche, smaller markets, to be able to sell product as well.
Once again, back to the railcar and the terminals, it allows us to hit whatever market, is the highest value market at any given time. Really, our Canadian strategy around having assets around to enable us to execute our marketing strategy, we're looking to replicate that strategy in those U.S. markets that we've been doing business for the last 15 to 20 years. Here's the examples of what we're looking at. We purchased Oklahoma Liquids Terminal back in 2018, very analogous to our Keyera Edmonton Terminal. It's a logistics plus a blending facility that we've got a lot of expertise in. It's exceeded our financial expectations. We're very pleased with that asset. Part of it stemmed around the ability to access less expensive feedstock in butane, that's blended at that facility.
We continue to be very optimistic around that facility being able to perform the way we saw it perform in 2019. Wildhorse is an asset and an opportunity that we're very excited about, very similar in size and scope to Baseline Terminal that we have in Edmonton. Fee-for-service business in the most liquid oil hub in North America. At the end of 2020, when it comes online, we expect very strong results from it as well. Finally, a new investment that we're announcing today, which is a butane on-demand gasoline blending facility at the Galena Park terminal in the Houston Ship Channel. That's the same Galena Park that we have been shipping a significant amount of iso-octane into over the last five, six years since we've owned AEF.
That is a technology that's very similar to the iso-octane blending, and it also involves the same customers that we've been dealing with on the iso-octane side. We'll be now dealing with on the butane on-demand blending for gasolines at that facility as well. Finally, I missed one point. Oklahoma liquids terminal and Wildhorse, as we go to the next slide, you can see they're actually quite synergistic as well from an operational and commercial perspective as well. Now, hopefully, we can see that we're starting to round out the same strategy that we have in Canada now in the U.S., in markets that we're very familiar with very targeted niche investments, high rate of return investments to supplement our business as we grow that business. Okay? In the Gulf Coast, the only thing I haven't talked to is the Hull terminal.
We purchased that facility. I've been able to now put some pipe around that to access to the east of Beaumont Port Arthur market, and to the west, Mont Belvieu. Where we're headed in the next five years. The expectation is that we're going to have Wildhorse up and running and very happy with the returns that we're expecting off of that asset in late 2020. We have the new Galena Park butane on-demand blending facility that I just introduced. Opportunities around KAPS that Brian talked about, and that's why I love the slide that he finished off with, is that our ability to be able to create margin within the marketing group is very much influenced by the assets that are upstream of it.
As we add more and more assets and bring more volumes into the Edmonton market through KAPS, we expect that we're going to be able to grow our business in the same disciplined manner that we have in the past. We'll continue to selectively pursue high-value niche opportunities. One point, though, in the U.S., we're going to make sure that we see the results that we expect from the assets that we've sanctioned to date before we would likely get into pursuing additional opportunities in the U.S. What does that all mean? Well, that means that an expectation is that we're going to increase that base guidance that we currently have in place, which is CAD 180 million to CAD 220 million a year.
For 2020, I'm guessing that there's not many people in the room that would be surprised by the statement that our realized margin in 2020 is expected to exceed that base of CAD 180 million-CAD 220 million. We expect that we'll provide formal guidance with our Q1 results in May. For now, obviously, we feel comfortable in the statement at the bottom of that slide. Similar to, and in lockstep with the graph that Brian showed, is our expectation is that we're going to continue to be able to grow the base going forward. We didn't talk much about the market opportunities, but the flexibility of the assets allows us to be very opportunistic to be able to do better than the base.
We expect, obviously, with more assets and the existing assets that we have, to continue to be able to execute on that as we have in the past. With that, I believe we're going to break, and I think Lavonne has some specifics about details on the break. Thanks very much, everybody, for your attention.
We are going to take a 15-minute break right now. For those of you who are joining us here today, please join us out in the lobby for coffee and refreshments. Those on the webcast, we will be back at 10:30. Thank you.
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To see the song that sings forever. To see the song that sings forever. How long can I wait for you? Trying hard to remember. To see the song that sings forever. To see the song that sings forever. To see the song that sings forever.
One love inside. Does anybody remember being up on the roof, sneaking into that place just to find out who he was? We survived together because this music saved our life. Thank God for those who remember and can share their stories with us. It brings tears to my eyes, but joy to my heart. I am glad that I was a part of that first changing of the hearts of people in searching for truth and sound in the world around them. Thanks for the music. Thanks for the truth you share.
Welcome back from the break. I'm a little nervous. I always get nervous after a break. I'm not sure who's going to leave and have an extended break when the finance guy comes up. I'm glad you guys all stuck around. I think I only counted one person who's heading off, so appreciate that very much. I hope you believe, as I do, that my colleagues did a very good job this morning so far presenting some of the business strategies, the ESG views, the need for our commodities within the world and the global landscape. It's a testament to the type of work there. My name is Steven Kroeker. I'm the chief financial officer. I've been here over 13 years. The last half has been in the chief financial officer role. The first half of my career here was on the corporate development side.
I had come from investment banking before that. When I first made the jump over to the corporate world again to Keyera. I had received quite a few comments and emails from different people that I knew who were familiar with the Keyera management team, and they expressed a lot of good congratulations about moving to that team. It's a very credible team, and I can honestly say over the last 13 years, I have seen the humility within that team. I've seen just the depth and practical nature of the team and just the solid management of the company, and I appreciate being at Keyera, and I look forward to walking through the next few slides where we're going to talk about some financial perspectives. We've heard a lot of good things on the business strategies within the various business units.
Those business strategies are underpinned by a solid financial philosophy. We're going to walk through some financial priorities. My goal is that you will not be surprised at all by our financial priorities and that you have grown accustomed to seeing them in the past and going forward. What I do want to do, though, is spend the first few minutes, the first few slides, and talk about the positive momentum, the positive delivery of shareholder value that we have received as a result of following those financial priorities. We're going to go over a couple of slides very briefly that David went over. Again, the reason I bring this slide up is just I think it's worthwhile just to pause and remember that over 16 years, these kind of results have been generated.
For a lot of people, even that far left column, that is the DCF per share you would normally see for a lot of peers. Yet, from our point of view, we've been able to do that from a dividend perspective for over 16 years. If you move to the next slide here, David briefly talked about this one. Again, it's important to recognize that even during the last few years of more challenging times, even during us adding new capital to historical capital in the denominator of calculating return on capital, we have achieved nearly 15% return on capital in terms of invested capital. On the right-hand side, important to note that all the capital for Wapiti Phase 1 is in the denominator, yet Wapiti is still in a build-out phase in terms of the numerator, the EBITDA and the realized margin it's generating.
Again, we're very happy with that performance so far. We did look over some DCF and dividend graphs earlier, but they were back to IPO. Sometimes people ask us, "What have you done for us recently?" What we did here is we chopped off the first 10 years of the performance and said, let's pick a year that occurred prior to the downturn in the commodity cycle. In the second half of 2014, when the commodity cycle started to come about. You can see it's been a very strong 9% compound annual growth rate in distributable cash flow per share. On the right-hand side, the last 12 months to September 30th, that is a little bit lower because there are higher cash taxes in the last 12 months due to the timing of our capital.
Our capital didn't come into play by the end of 2018. Therefore, we didn't have those same type of shields going into 2019. For a data point and for reference, you know that in Q3 conference call, we announced that our forecast for cash taxes in 2020 is nil. If that same nil had been in effect for this past year, that distributable cash flow per share would be more like CAD 3.35, in that range. Similarly, on dividends, a very strong track record in dividends. Even though it's been in the challenging industry conditions, still a 9% compound annual growth rate in dividends. I just want to talk on the next few slides, just basically on our financial priorities. We boiled it down to a very small group of them, continued disciplined capital allocation and preserve our financial flexibility.
Out of those is our third one, which is to grow the dividend steadily. We're just going to spend some time now on continued disciplined capital allocation. Dean will come up a little bit later and talk about some other criteria that we use to look at things. In essence, when we look at these items here, strategic fit and complementary diversification is one item in particular that we look at. You can see that with the build-out of Norlite Pipeline in terms of extending our condensate system, the Alberta EnviroFuels acquisition, which extended our butane value chain, our Simonette acquisition, those types of projects. Our building out of the Wapiti system in Northwest Alberta, again, another key driver to grow the business. Complementary diversification is also a key aspect.
When we look at that, something like the Base Line Terminal would be a key item there. The Wildhorse Terminal in the U.S., where we're leveraging our expertise in Canada and bringing it down to the U.S. as well. Another criteria we want to look at is the increased cash flow per share. To use as a marker for that, to help people look at that and measure us and hold us accountable to that, we came out in the spring and said that our capital program, we expect to generate a return on capital of 10%-15% on that annually. Again, we reiterated that when the KAPS announcement came out a little bit later in the spring. We said for that project as well in 2024, that we would have a 10%-15% return on capital is what we expect in that respect.
We'll continue to look at the other key factors, internal rate of return, cash flow per share accretion, but we thought this was a good target to be able to communicate publicly with people. Now again, there's usually a very clean line between increasing cash flow per share and to share price growth. What sometimes gets lost is just the risk that people attach to a cash flow stream. That's why we have the third item on the page, which is enhance the quality of the cash flow. From that point of view, a target that we want to use is that on a corporate basis, we want over 75% of our realized margin to be coming from fee-for-service . So how are we doing on some of these items? We'll talk about the bottom one in particular, since we've talked about the second one already.
Two components to this test. What is the absolute size of realized margin from the fee-for-service business, and how has that been growing? You can see in 2014, we had CAD 408 million of fee-for-service realized margin. In the last 12 months, CAD 657 million. That is over a 60% increase in absolute fee-for-service realized margin, and that's over a 10% compound annual growth rate. The question is, are you still making progress on getting over 75% of your corporate contribution? Here on this slide, we tried to look back at the year-ends of each year and give you a sense of what that contribution has been. If you look at the far right-hand side, we are currently at 64% of the contribution coming from fee-for-service for the last 12 months.
Now, that being said, as you heard from Jamie, we've had a very strong year in terms of the butane to iso-octane value chain and in our other products within marketing. If we were actually using a midpoint of our base guidance for marketing, then we would be at 76%. That fee-for-service goal, that being greater than 75%, is also supported by our capital program. We have a CAD 2.9 billion capital program underway, as you've heard previously. By far, the vast majority of that is fee-for-service. Again, we'll continue to underpin the objective, even with strong marketing years, of continuing to move towards that 75% or greater contribution from the fee-for-service business. Moving to the second priority, preserving our financial flexibility. We boiled it down to basically these two bullets. Maintain our BBB credit rating. That allows us access to different sources of capital and financing.
Secondly, we haven't done this before, but we decided to come out and describe a long-term dividend payout ratio of 50%-70%. We think those two things will lead to a continued focus on preserving our financial flexibility. In terms of maintaining the BBB, we look at it as sort of a multi-factor kind of approach. In reality, our rating agencies, and some of them are in the room today, some representatives, various factors are considered and not just pure balance sheet when looking at a credit rating. We tried to summarize it here in terms of three or four key bullets, and my colleagues have done an excellent job already talking about competitive positioning within each of our business units. They're all essential services. How are we positioned for each of those?
The quality of the cash flows, you heard from Brian in particular about just the strength of the oil sands side, and we're going to talk about that a little bit more. On the G&P side, whenever we employ new capital, we go and get underpinnings for that. So in the G&P world, it tends to be long-term contracts that are fee-for-service based. It's longer-term, what we call midstream relationships, and that's based on fee-for-service, a meaningful portion of take or pay. Then on top of that, we try and wrap an area dedication all the way around that, so that whatever's produced in that area by that counterparty, that is coming to us, and that helps protect the franchise even further. On the liquid side, it generally tends to be more long-term contracts with a very high take or pay on that side.
Scale and diversification. We're quite happy with the progress we have made in terms of enhancing the liquidity and size of the company. We don't want to be big just for the sake of being big, but it does come with more opportunities. It comes with diversification. It comes with the ability to have a lower risk profile overall by being a little bit larger. We do continue to look at scale and diversification as, again, my colleagues have described. Appropriate capital structure. We'll look at that on the next slide here. Historically, we've always shown a leverage ratio in our financial statements to make it easy for people. The important thing to realize, and we talked about this on the Q3 conference call, is that that's a senior debt ratio.
Now that we have issued hybrid securities back in June, the subordinated debt, it is important to realize that from a management point of view internally, from stakeholders, from investors, from rating agencies, that we should be incorporating a subordinated debt perspective as well. What we tried to do here is just give you a very simple formula. No surprise. It's senior debt plus 50% of the subordinated debt, because that's the debt treatment we get from the rating agencies, and divide that by last 12 months of EBITDA. That's 2.5 times on that methodology. It's a very simple marker. Obviously, the rating agencies and perhaps different investors use different adjustments to get to different kinds of ratios.
We think our target range of two and a half to three times equates to what those other stakeholders would use for. They may have higher type of multiples, but by the time you do all their adjustments, we think the two and a half to three times is an appropriate target range that is consistent with our past, which has served us well, and consistent with our various people who look at Keyera. We're also focused on counterparty quality. Again, if you look on the left-hand side on a corporate basis and look at our revenue year to date, you'll see that almost 80% comes from investment-grade parties, split-rated parties, or else they're secured counterparties. On the right-hand side, you can see the bulk of that comes from the liquids infrastructure side. Not a surprise, given the massive scale of the oil sands players.
As well on the marketing side, we generally work with very large parties on the marketing side in terms of the revenues there. On the Gathering and Processing side, there is less investment grade, but we do employ letters of credit. We do employ netting agreements. A lot of times, as Jamie described, we will go buy the NGL mix from producers and then quite often we try and put a netting agreement in place. Any fees they owe us, we get to net off what we owe them for their NGLs, and that's what helps facilitate that. The Gathering and Processing business is also spread over about 150 counterparties in that business segment. We want to continue a conservative payout ratio.
Again, you can see historically, if you go back to 2013, that has been a very good range for us to work with and we're confident that if we move forward and look at our views ahead, that 50%-70% is a good range to hold us accountable to continue to preserve financial flexibility and to continue to look at dividend growth as well as we go forward. Just for reference, the last 12 months, 61% was our payout ratio over the last 12 months. Those two financial priorities, continued capital discipline allocation, preserving our financial flexibility, those two priorities have enabled us to invest meaningful capital. This is just a quick summary slide.
Our current capital program, again, CAD 2.9 billion, CAD 1.5 billion has been spent already, another CAD 1.4 billion to go. That basically implies CAD 400 million-CAD 500 million of capital in 2021 with some minor amounts in 2022. Again, that's been made possible, and as David mentioned earlier, we made a commitment and given an expectation that we do not believe we need to raise any more discrete common equity, besides the DRIP, to fund that program. The question is, what is it on a go-forward basis? Are there any thoughts, any kind of data points we can provide you there? We did decide to go take a crack at giving you a sense under a couple of different scenarios of what could that potential annual funding capability be under a couple of different scenarios.
Just as an overall context here, this slide is based on marketing being at base marketing levels, CAD 180 million-CAD 220 million. To keep it really simple, no discrete common equity issues anywhere. On the left-hand side, there is no DRIP program, and on the right-hand side, it's with the DRIP program. Again, we tried to take some conservative assumptions. We tried to be conservative, basically, and tried to give you some reassuring views as to what that capital looks like. We think we can do CAD 500 million-CAD 600 million annually after 2021 in terms of potentially being available to spend on capital. If you turn on the DRIP and get the extra little bit of leverage that comes with that, then CAD 800 million-CAD 900 million. What I'd emphasize that these are data points. These are scenarios.
A host of things can affect what kind of size you can do. It can depend on how the base business is doing in terms of more capacity, more spare capacity being used in terms of return of the markets. It can be marketing being at excess levels like we are currently. There are different factors, but we thought it was helpful to try and provide some perspective on just the strength that's within Keyera's base. A lot of that strength is coming from that capital program that's underway. At CAD 2.9 billion, even at the low end of the 10%-15% range, that's almost CAD 300 million of extra realized margin coming into the business. In summary, our financial priorities, again, not a big surprise to people, but continued disciplined capital allocation, and we've talked about some of the markers we want to look at there.
Then preserving our financial flexibility. Again, we tried to highlight some of the ones there on the screen. Together, those two things will lead, we believe, to continued growth, steady growth in the dividend. I will leave that now, and I'm going to turn it over to Dean, who is going to come up and talk about future opportunities. I'm going to make sure I do my part and exit this way.
I'm going to demonstrate that we're not all superstitious, so I can stand on the side of the stage as well. First of all, I hope everyone likes the caps. By the way, they are in the Keyera colors, which have been adopted from golf. They also happen to be the same colors as my favorite hockey team. Sorry, I had to throw that in there. I'm very excited to talk about the bright future that we see in front of us. That's above and beyond the projects and the opportunities and the initiatives that we have currently underway that will deliver a lot of visible growth well into the future. I want to make it clear that we will not pursue any opportunities without them being fully aligned with the financial parameters and discipline that Steven just talked about.
To be a little bit repetitive, we provide essential services from production to end markets. Our goal is to capture as much value in this equation as possible. When we do that, we have more flexibility to competitively attract more volumes into our system, which enhances our overall profitability. As you've heard today, we have a lot of growth opportunities within our base business. In our Gathering and Processing segments, in our northern area, we have our Montney/Duvernay build-out. When those facilities are online, we'll ramp up the volumes over time. It'll also help us access more liquids, which support the downstream part of our NGL business. In our South Capture Area , we have our optimization program. Again, that's all designed to enhance our overall competitiveness by reducing our cost profile, but also increasing our utilization.
Our per unit cost will be more competitive, where we can attract more volumes in our system and again, increase the profitability for Keyera. We look at liquids infrastructure, we have two significant businesses in this segment. One is our fractionation, storage, and terminaling business. The other is our oil sand services. Those oil sand services are really anchored by our diluent handling capabilities and also our condensate storage as well. Both of these businesses are highly profitable businesses with significant barriers to entry. We see a lot of growth from these two businesses for many years to come. On top of that, Brian talked about our KAPS Pipeline. To me, this is a transformational project for our company. It's going to connect our upstream gas gathering processing assets with the downstream NGL business and make that whole system more competitive.
It will enable us to access more liquids for the downstream part of our NGL business. Where we see significant opportunity going forward is to access high-value markets, and that might be accessing them or upgrading them into high-value markets. Why do we say that? It's because we have world-class reserves in Western Canada. What we lack is enough market. We can be part of that solution. Our goal is to access the highest value market for every product in our system, and I'm going to talk about each one of them. Let's start with ethane. Ethane is oversupplied in our basin, and today a lot of it is left in the natural gas stream. It's sold as natural gas, and it's either consumed as natural gas or it gets exported into the U.S.
We have a couple of petrochemical companies in the province that use ethane as a feedstock, and we do supply ethane feedstock to them. Our goal is to secure more long-term contracts to supply that ethane feedstock, whether it's for the existing facilities or new ones that could be built in the future. You probably heard that the Alberta government wants to diversify Alberta's economy. Part of that is they're looking to provide more incentives to attract and enhance petrochemical development. If this occurs, again, we're a natural supplier of that feedstock. If we're able to secure more long-term contracts, it will help economically support enhanced ethane extraction. That could happen in both parts of our G&P portfolios, either in the north or the south, where we would take a deeper cut of ethane, which are NGLs, which would include ethane.
We would move that ethane mix through one of our NGL gathering systems, be it Keylink or KAPS. We could switch both of them to an ethane plus stream. That would lead to more opportunities to create more de-ethanization capacity, fractionation capacity, and also storage to supply that feedstock to petchems . Again, that's part of our overall goal is to secure more long-term contracts in this area. Propane is another product that is in oversupply in Alberta. Most of it gets exported out of the province. We have three facilities that have truck and rail capabilities, export capabilities, and that's up at Fort Saskatchewan, Edmonton, and also at Rimbey. All three are pipeline connected, and we can also access both rail lines, CN and CP. We have a tremendous amount of flexibility within these three assets.
Today, we use our truck racks to serve local markets, and most of that is for industrial use. We use our rail racks to export propane right across North America and to the highest value markets. Sometimes that product goes out to the east. It can go mid-continent to a Conway market. We ship product down to our hull terminal down in Texas, where we access Mont Belvieu pricing. At times, at the Mexican border, we can deliver product there when they pay the most money for it, and we can also export to the West Coast. Again, tremendous amount of flexibility. Our goal overall is to have the assets in place where we have the flexibility to access the highest value markets as they continue to evolve in the future.
One of those markets that we see that will continue to grow in the future is the market for solvent. Propane is used as a solvent in SAGD operations. The reason why it's valuable is that it helps to mobilize the bitumen subsurface. It reduces steam oil ratios, which improves economics, but also reduces the carbon intensity of the projects and also reduces the amount of water consumption as well. Because of that, we see the demand for solvent growing over time. As that demand grows, we'll look for more efficient solutions to deliver that product to site, and that includes pipelines. On top of that, we're seeing petrochemical development and again, PDH facilities that require propane as a feedstock. The first will be in service or is expected to be in service in 2022. We are going to be pipeline connecting to that facility.
Again, we can deliver propane as a feedstock to them. When we look longer term, we see a lot of demand in the world for propane to be in Asia. We have a structural advantage off the West Coast of Canada, and that's because of the shorter shipping distances. We can make a round trip by ship in about 25 days less time than the U.S. Gulf Coast. The other factor in our favor is that we don't have to contend with the Panama Canal. That area is seeing increased congestion with the amount of ships that are flowing through there. Again, it poses an additional risk for the buyers of propane. Again, another advantage that we have off the West Coast of Canada.
Overall, as I mentioned, our goal is to have the flexibility within our assets to access the highest value markets. We see West Coast exports as being one that we have to continue to evaluate. That could be we lock that opportunity up with contracts contractually, or we may also participate in a West Coast terminal as well. That's what we're evaluating and looking at for propane. We have a lot of butane in our system as well, and a lot of that is because of our Alberta EnviroFuels facility, which produces iso-octane. We use butane as a feedstock, and our AEF facility consumes more butane than any other facility in Edmonton. We also deliver butane for the blending markets in Edmonton, and some of that is to the refiners in the area.
We're also, as I mentioned, looking at West Coast offtake opportunities and the potential to export butane off the West Coast. Because we have such a great, profitable franchise with our AEF facility, we're looking at opportunities to expand it, to have capacity to make more iso-octane. When you look at the future of fuels, and Jamie talked about this, it's going to a higher octane spec, and that's because the car manufacturers, the auto manufacturers, are making engines that are higher compression and they require a higher octane count. That's to meet fuel efficiency improvements. These gasoline specs we're already seeing in places like Europe. On top of that, there's been more regulations that have been added. If you look at the Tier 3 standards in the U.S., those have been put in place to reduce the amount of sulfur in the gasoline.
They come into full effect in January of 2020. On top of that, there's penalties for aromatics. Products like benzene that have health risks, again, they're trying to eliminate that from the gas pool. On top of that, there's RVP restrictions, and that's to limit the amount of vapors that emit up into the atmosphere. When you look at products like ethanol that have a bio component to it and they're very economic, they're high in octane, but they're also high in RVP, so they're not the total solution going forward. When you add up all those factors together, we see a bright future and a lot of demand for our iso-octane. We are looking at expansion opportunities. Having said that, we would have to incur a significant financial investment for the expansion opportunities that we're looking at.
We need to make sure that we have the right contractual backing to move forward with that initiative. The other thing I'd like to mention is that we have a tremendous competitive advantage at this site relative to anyone else who wants to build a facility like this one. We have a lot of infrastructure in place that supports an expansion already. On top of that, we also have all the pipelines and the rail capacity to export it. We have the expertise on site. There's about 27 people that turned on the lights about 28 years ago. The expertise is on site to run it very reliably. Also, we have the knowledge of the downstream marketing business, the markets for gasoline and the markets for octane as well. With all this, again, we'll continue to evaluate this opportunity and we'll move it forward.
Condensate is the most valuable commodity that we handle in our system. Again, that's what's driving a lot of the production growth in the Montney. We have the hub for condensate, which is used for diluent in the oil sands. We have the most connectivity to receive condensate into our system and deliver to the oil sands. As you heard from Brian, all the major oil sands players have contracts on our system, and that's where they want to receive their product. Most of you might know this already, the field condensate that's getting produced out of the Montney is heavier in density. That heavier density condensate is not ideal for bitumen blending. It's because the higher the density, the more you need to blend and flow through a pipeline. When you're in a pipeline-constrained environment like we are today, that's not very helpful.
What's happening now is that there's been significant investment made in the field to upgrade that field condensate barrel to meet pipeline specifications. Our goal is to find a solution where we would relax the spec on our KAPS Pipeline, where this heavy condensate barrel would be able to flow right into the line, right into Fort Saskatchewan, and we would process that heavy condensate barrel there. Once we process it, we would create a very light condensate barrel. Again, that's ideal for oil sands dealing with blending. In addition to that, we'd also create other high-value byproducts through that process. This would satisfy the needs for our oil sands customers and also our Montney natural gas and condensate producers as well. Crude oil. We have an aboveground tank storage facility called BTT, our Base Line Terminal, and it has 4.8 million barrels of capacity.
We have the ability to expand this facility by 1.8 million barrels. The great thing about this site is that we already have a lot of the infrastructure to support that expansion. That includes the manifolds, the pipelines, the pipe rack. We have a bridge over a highway in Edmonton, again, to bring our pipes over top of that highway. It's called Baseline Road. We have our office there, and also the personnel on site to run that facility. Again, the expansion would be very economic. What's important to know about tank storage is that you can build it anywhere. What makes it valuable is the connectivity, and we have unparalleled connectivity at this site.
When we see the Trans Mountain expansion finally built, we certainly believe with it there'll be more demand for aboveground tank storage, and again, we have the site to build the next expansion. I should also mention that Pembina is going to be our partner at this site, and we will work closely with Pembina. We're very aligned to maximize the profitability of this business. In terms of our overall investment considerations, we're very dedicated to grow steady shareholder value over the long term. What that means is that we're looking for opportunities that are complementary to our business and our expertise, ones that will serve as platforms for future growth well into the future. They have to have the contractual backing that will deliver and be consistent with the financial parameters that Steven laid out earlier.
They have to meet our return criteria to meet our minimum thresholds. Ideally, that means that we have a fee-for-service component that gets us into our return on capital hurdles that you see here, but also have marketing opportunities where we can generate industry-leading rates of return on our opportunities. They have to be accretive to our cash flow, which also drives our dividend growth in the future, and it's a track record that we're very proud of. We also have to preserve our financial flexibility. What that means is that our opportunities have to be aligned with our financial capabilities. With that, I'm very pleased to, again, outline some of the opportunities that we see ahead of us. On behalf of our team, we're very committed to deliver shareholder value. With that, I'll turn it over to our CEO, David Smith.
Thank you, Dean, and I want to say a thank you to all of my colleagues who have been up here presenting today. The work that they've put into being able to put all this information together for you is really quite incredible. Thanks to the team. There you have it. We are delivering positive energy. We are focused on operational excellence, successful project execution, disciplined capital allocation, providing unparalleled customer service, enhancing profitability, maintaining a strong balance sheet, effective risk management, improving the environment, and steadily growing our dividend. We are in it for the long term. We have created significant competitive advantages and barriers to entry, as you've heard today, and we have a great team. In my opinion, we have the best team in the industry. We care. We care about the business.
We care about our customers, our communities, our shareholders, our other stakeholders, and we care about our planet, and we care about each other. I'm proud of our team, and I'm proud of our track record, and I'm proud of the contribution that we're making to the Canadian economy and to the health of our planet. I'm excited about the opportunities that we have ahead that you've heard about. I hope you are as energized about Keyera's future as we are, and we invite you to join us on our journey to deliver positive energy. At Keyera, we are connecting energy for life, and we are never done. Thank you for listening, and I think at this point, I'm going to invite my colleagues up here to entertain your questions.
At this point we will just take a few minutes to get everyone organized up on the stage for the question and answer session. For those of you joining here today, you can either raise your hand and we'll bring you a mic to ask your question. You can also submit a question via text and the number to do that is on the back of your name tag. If you're joining us on the webcast, you can submit a question via there as well. All right. It looks like we have our first question. Go ahead, Rob.
Hey. Hi. First of all, Robert Catellier, CIBC. First of all, thank you for the presentation this morning. It was a very good use of time. I want to go back to what you opened with this morning, David, in detailing the strategy of some niche investments in the U.S. and then really focusing still on Canada. It occurs to me you may have considered the merits of basin diversification as you made that strategic choice. I understand the logic of leveraging the assets you have, because that's a competitive advantage, but can you walk through your views of the benefits of basin diversification and how that fits into your view going forward?
Yeah. Thank you for that question, Rob. I think in any industry, there's always a balance to be found between diversifying away from your core strengths and capitalizing on the competitive advantages that you have in the businesses that you know well. For us, we've looked at many opportunities in the U.S. over the years. We think that there's capabilities that we could bring to those opportunities. The challenge is that it's a very competitive environment. For us to buy our way into some of the stronger resource plays like the Marcellus or the Bakken or the Permian, you're going up head to head against some very well-established, capable competitors. Our choice has been to focus a little bit more on the niche opportunities that we see extending the liquids value chain, as you heard Jamie talk about.
I think that that's likely going to continue to be our approach, not a major investment, but more of an incremental approach to it. Having said that, as I think we tried to explain this morning, we still see lots of opportunity in Western Canada. We do believe that we've turned the corner in terms of the extended downturn that we've had for a variety of reasons. We have some tremendous competitive advantages in Western Canada in the capabilities and assets that we've developed. We think it just makes sense for our shareholders to continue to capitalize on that.
Okay, just a second question for Dean here. On the notes, the change in tone towards propane exports. There's been a number of Alberta-based or Western Canadian demand projects out there, two PDHs, two export facilities. You haven't yet participated, but it seems like you do have an appetite for that. Can you walk us through the process why you haven't participated yet, and what's changed, if anything, to increase your appetite for those types of investments?
Thanks, Rob. As I mentioned before, our goal is to have maximum flexibility to access the propane markets going forward as they continue to evolve. We are building connectivity to make sure that we can hit all those high-value markets. We certainly see structurally the demand for propane increasing in Asia over time. Again, we believe that having access to a West Coast terminal is advantageous to our overall infrastructure. The question is whether we just want to access it contractually or whether it's better off to own it. These are things that we're currently evaluating.
There's some talk about expanding AEF, but maybe more direct, and it wasn't really directly addressed in the presentation, but talked around just about increased fractionation capacity at the Fort. What can you do in your existing footprint to really double up the facility? Then with the lands that you acquired not that long ago, where would you think about additional frac capacity? It ties into so many things that you do.
Brian, do you want to talk about that?
Sure. I think what I would have referred to is fractionation and storage is a key part to our business, and we feel like we're good at it. I think when we look out at opportunities and with KAPS now, there will be a need for incremental fractionation capacity. Our options are really to expand at KFS. We have room to probably add another 65,000 barrels a day of fractionation capacity there. Certainly at that land that I noted in that one slide there where we showed 1,290 acres, we have land to develop that with a whole lot more than that. It's really, though, going to be developed over time, and we'll be doing it within the criteria that Steven and Dean had laid out. We'll look at the opportunities to do that.
It'll be driven by the customers wanting that service. I think certainly KAPS is probably going to be a bit of a driver for that as we look forward. One of the things we have as well for flexibility in managing that, because of course, we have to manage the capital and the spend within all of our other opportunities, is we have a lot of short-term contracts at our fractionation. We'll be able to feather any capital around fractionation over time here to make sure it fits within the criteria. Andrew, maybe just to Brian's response is that as we look at West Coast's opportunities, again, ownership or contractual, we'll also look at field frac opportunities.
Over the long term, if that propane barrel is destined for the West Coast, it's more efficient to put on a rail car and send it straight west versus bringing it into Fort Saskatchewan and back. The good thing is, with their KAPS Pipeline, it's really the best backup solution where if you don't get continuous rail service, you can put that propane in the line and take it to Fort Saskatchewan and put it in our storage.
Maybe just to follow up, because you've mentioned partnerships, you've got a number of partnerships in the space, and someone mentioned NorthRiver Midstream earlier on the Brookfield affiliate, and if you think field fracs and just what's happening in Northeast B.C., do you see opportunities to be a part of a frac hub there and partner up with Brookfield as just one example?
Yeah. Dean, why don't you speak to that?
Yeah, I'd say overall, we are a good partner. We like opportunities where we bring something and we add value to an opportunity and someone else does as well. Together, we can create something more valuable. Not to get too far off track, but if you look at Kinder Morgan, we've done three deals with them. We did our first deal at our Alberta Crude Terminal. We built Base Line Terminal, which is a very valuable facility, worth much more than what we invested into it. Now we just announced a deal down at Galena Park, and that's all based on us having a strong relationship with that partner. We have that in a number of different situations. What I can say is that we continue to look for more opportunities to partner where, again, we can partner with someone and add incremental value.
We do recognize that there are liquids on the BC side of the border, and we will look for opportunities to try to capture some of that business.
Yeah, I can just add a bit too. I think the comment I made on NorthRiver Midstream was really working with them around unlocking the value of Northeast BC reserves. We see tremendous potential in BC. You talk about the Montney being how prolific it is, and it actually gets thicker into BC, it's tremendous. NorthRiver Midstream has a presence there with the acquisition of some of the assets they made from Enbridge. We just see, again, that the sum of our companies working together can provide a better solution for the customers than each of us individually. It's something we're working collaboratively with on them right now.
Matt Taylor here from TPH. Dean, you had mentioned that Galena Park investment. Can you provide more detail on that, perhaps some CapEx return assumptions? Even more broadly, if you see some more opportunities down there, what would those entail?
Matt, thanks for the question. Capital-wise, it'll be less than $50 million U.S. We would expect, on the range that we share in 10%-15% rate of return on capital, it will be on the high end of that range. The assets that we're going to get access to is a connection into a pipeline that's sourced out of Mont Belvieu from a butane storage perspective. We're going to be pulling volumes out of Mont Belvieu through pipe, interconnected into Galena Park, connected to a 30,000-barrel sphere that will then be connected into over 25 tanks on site. Six channel crossing pipelines because our partner is Kinder, and they have a terminal across the channel called Pasadena. Collectively, Galena Park and Pasadena is the largest gasoline hub in North America.
The on-demand nature of it is just to be able to obviously get the maximum butane content into the gasoline. It's a service that customers at Galena Park and Pasadena have been asking for from that owner. We're extremely excited about the opportunity to partner with Kinder in this project.
Yeah, thanks for that. Just a second one, if I may. A diluent recovery unit has now been announced. Two-part question: can you talk about what your thoughts there would be on diluent demand in the basin and what that would be for impact to potential KAPS service? A follow-on to that, would you guys be interested in doing something like that, given your rail connectivity and obviously your well positions with KAPS?
I'll let Brian Martin talk about the DRU.
The diluent recovery unit you're talking about that was announced was the one at Hardisty with Gibson's, I assume. We believe that that's a good, solid investment for Gibson's, so we applaud them for that. I think it's good for the industry as well. I think the reason Hardisty is probably the right place for that, from my perspective a bit, is that there's all sorts of different crude slates that they can draw from over time. It's not just one source of crude. Again, we feel like it's a good investment. That crude has historically, and is today, moving in downstream pipelines. If that now is no longer moving in pipelines because it's going through the diluent recovery and onto rail, we think that it'll be easily displaced with other crude barrels from the oil sands.
From an impact on Keyera perspective, it could be a net gain. Actually, in terms of that diluent that's recovered down in Hardisty will very likely find its way back up Southern Lights and into our system or up to the oil sands, as well as it will now allow for incremental volumes to actually leave the province on pipe. I think it's a win for Gibson, it's a win for the industry, and probably a win for us. With respect to whether we would look at a diluent recovery unit, we look at lots of things, and again, it has to fit the criteria of the opportunities and we haven't made one of those work yet, but we'll continue to look at a lot of things.
We'll take Ben's question.
Hi, Ben Pham, BMO Capital Markets. This question is maybe for Dean. When you think about projects and development, whether it's AEF expansion, new fracs, could you quantify the total investment opportunity for us?
It's significant. What I want to make clear though, Ben, is that the current projects that we have sanctioned, including KAPS, those will be completed by into 2022. The projects and opportunities that I just talked about in the last section of the presentation, the material amounts of spend would occur in 2022 and beyond. We're looking at sort of a five-year window beyond that. They fit nicely in terms of where our capital commitments are or where we'll have free cash flow. As I said, we will not pursue anything that is beyond our financial capabilities. Again, where necessary, we'll bring in partners. What our net exposure will be to that capital, it's something I guess we don't know today, but it's significant. The opportunities that you just saw require significant capital.
The great thing is, I believe we have more opportunities than we have cash, which is maybe not a bad position to be in.
Excuse me. ESG, just curious, not sure if you know, where do you stand relative to peers? I mean, you spent the last two years on disclosures, is there anything, just where you stand, is there anywhere there's some easy pickings where you can really move up the score in the metrics?
Nancy, do you want to respond to where we stand in terms of some of the ratings that are out there for ESG?
Sure. I think you well appreciate that sort of the criteria and the agencies are multiple and various and use different criteria, and also that different peers report very differently. I don't know that it's necessarily an apples to apples comparison in all cases. What I will say is that we have done that analysis and that we do rate consistent or favorably to our peers by our own analysis. In respect of the various agencies, I would say, we rate generally consistent with our peers, and in some cases, we've been rated as an outperform on Sustainalytics and ISS in particular, that we've received outperform ratings. I think we'll all continue to get greater transparency into that as we get more consistency on the methodology about how everyone is reporting and the different agencies that we're reporting to.
We have reported to pretty much all the major agencies, in part for that purpose, which is to get a bit better of a sense of how we're performing relative to our peers. In respect of any low-hanging fruit, I don't think that we have identified anything that's of significant concern to us that we need to imminently address. I don't know if that answers your question.
That's great. Thank you.
I think if you pass it ahead, Linda has a question.
Sure. Just to follow on the bucket and scale of growth opportunities. Is it reasonable to assume that if you're able to invest at your 10%-15% return expectations, your free cash flow, that the cadence of growth continues apace with your historical growth rate, or do you see it tilting differently over time?
That's a difficult question to answer, Linda, because it depends very much on the nature of the capital investments. A big part of the capital program that we have underway now has a little bit of a longer lead time associated with it to get to the 10%-15% return expectations that we have. That will ultimately determine when you start to see that cash flow growth that will in turn generate more cash flow for reinvestment. It's a bit difficult to make a general statement about that. Steven, I don't know if you had a comment.
Just as a follow-on from a macro industry perspective, there's the potential for change beyond DRU and the condensate industry. There's been some speculation that over time, one or both of the condensate import lines into Western Canada could reverse over time. How are you thinking about those possibilities, and how does that influence how you navigate your opportunity set within condensate and make it resilient in all possible future scenarios?
I'll turn that one over to maybe Dean or Brian.
Sure. Good question. What I'd say is we certainly acknowledge and know that condensate is the biggest cost for oil sands producers. I think we're aware of that, and we actually work with the oil sands producers, and we'd rather be working with them to solve some of those issues and be in front of it, as opposed to just sitting back and then having impacts on that. We are engaged with them, talking about those opportunities. With respect to the pipelines, I think what's important to consider is that there is a structural demand for condensate and diluent in the province right now. It's big.
For the oil sands producers to lose sight or to lose use of an import line like Southern Lights, probably what you're alluding to, where's that condensate going to come from, I think has to be answered and solved. Those producers have spent billions of CAD on their operations. Could it come from the field supplies and come from the Montney and Duvernay? Certainly that's been growing in terms of that supply, but it has to grow more significantly before I think that you can take Southern Lights or something like that as a service.
If it were to be taken, I can't comment on that. Enbridge is in a better position to comment on that than us. If it were, then I think we almost have a bit of a natural hedge and that'll be very good for KAPS business then, likely, bringing condensate in from the province, because, again, that condensate's got to come from somewhere. Also our rail infrastructure then, so bringing in imports of condensate into ADT or South Cheecham Terminal, that would probably be very bullish for that business as well.
I would add to that, we've heard lots of speculation about Southern Lights reversal. When we talk to Enbridge, they emphasize that their customers will ultimately determine what they do with that, and their customers are the oil sands producers who are the consumers of condensate. As Brian mentioned, they want diversity of supply for that condensate. I personally think that it's not something that's anywhere close to imminent. Having said that, we've designed our system for condensate handling with as much flexibility and diversity in it that we can provide the services to our customers regardless of where those barrels are coming from.
Yeah, I'd also add that, again, the oil sands producers want that light barrel, which they get that from the U.S. Gulf Coast. Second thing is, to Dave's point, is that I don't think they ever want to be caught short condensate in the market. If that happens, it's going to trade at a huge premium, which adds to their overall cost. I think those are the two things that they probably consider.
Go ahead, Rob.
All right. Rob Hope, Scotiabank. Hoping you can add a little bit of color on the 2020 financing plan. You have the DRIP on right now, but 2020 looks to be another good marketing year and you're getting a normalizing of CapEx into 2021. How are you looking at the DRIP through 2020?
Stephen?
Yeah. From our perspective, we right now are continuing to envision that being on during 2020. Every spring, we have a chance to look at what our marketing results will be for the upcoming year in terms of a contracted nature, or at least a preliminary look at that. Again, as I mentioned before, we have CAD 1.4 billion of capital still to be spent, and right now we think it's prudent to continue to keep that on. What I can assure you is that we continually look at the DRIP and the merits of keeping it on or off. Again, as we go through 2020, as we go through 2021, as we go through the marketing year for that year too, we will continue to look at the merits of that. One of our chief priorities is to preserve our financial flexibility.
All right. Part of that is predicated on the CAD 180 million-CAD 220 million of base guidance for marketing. I understand that butane will move around, and that's why you're using the NGL year to give your guidance. What about octane? How much volatility have you seen there over the last 12 months? It seems that it's structurally stepping up. Just want to get a sense of what variables are included in this CAD 180-CAD 220.
Well, maybe I'll talk the first part on the base marketing range, and then maybe Jamie can talk a little bit about the perceived volatility on iso-octane. We tried to give some guidance back in the spring on just some anchor points around that base guidance. We used a marker of $55-$65 U.S. WTI as a sensible kind of context. We also referred to butane costs more in line with 2018, in terms of more normalized percentage of WTI, and then just sort of industry norms for RBOB premiums over WTI. 2018 was sort of a standard year, which we thought represented some good basis for a multiple year view as to when you say base, when we say base, what does that mean? In my mind, that implies sort of multiple year kind of thing you can rely on.
What I would reiterate, though, is that there are, because it's our marketing business, and it's over four or five different products, and there are variables within each of those products, there are multiple ways to get to that CAD 180-220 base. As you saw earlier in Jamie's presentation about some of the things we're working on Galena Park and some additional aspects of Wildhorse, that just continues to give strength to that underlying base of CAD 180-220.
Jamie, you want to.
You want to speak? Yeah, I would agree that iso-octane has shown some volatility from our perspective on the good side in 2019. I think there are some strong fundamentals, as we discussed earlier, around why that is. We've certainly seen an opportunity to sell product to customers that historically we haven't sold that product to, and they've been very happy with the performance of that product. The other thing, though, I think, is the nature of gasoline pricing in RBOB as well, and how that ties into distillates, because we're seeing a bunch of refineries now change their process to serve more of a new marine spec that's coming out of IMO 2020.
There's a lot of dynamics going on in North America right now with respect to the gasoline complex, and then ultimately the octanes on side of it, which are all, in my mind, tailwinds towards having a very positive view with respect to the value of iso-octane coming out of Wildhorse.
It's Tyler Urban from Peters & Co. Just a question on KAPS. I guess the question is more just on the timing to upsize that project. When would that decision have to be made to take it all the way to move ethane plus?
Dean or Brian, you want to deal with that?
The alternatives for ethane plus, what we hear from our customers, again, I emphasize how we try to listen to our customers, and when we listen to the petchem operators that are existing or wanting to do business in Alberta, what they need is certainty that we can provide a C2+ service, and then certainty as well of what the content of that ethane would be in the stream. As we have those discussions with the producers, the options are it could be batching in one of the existing 2 KAPS pipelines. It could be just shifting from a C3+ to a C2+, and then handling the whole commingled stream, or it could be adding a 3rd line, quite frankly, to KAPS. We will be looking at that over the next little while and seeing how that unfolds.
Again, we have to be able to provide certainty of C2+ and have certainty of what the ethane content is in that stream.
We'll have to finalize the scope relatively soon. That pipe will be specced for a C2+ service, we can flip it if we want to. The question of whether we upsize or not, again, we'll have to make that call fairly soon. If we want to have another larger diameter line in the future, we might have to put another one into the ditch, and that'll be a great expansion opportunity.
Just the second part to that question, just on one of the maps you showed KAPS extending to the Pipestone plant, but I think somewhere else you talked about it going to the Alberta-B.C. border. Is the ultimate plan for KAPS to extend further right into northeast B.C.?
Brian?
The first phase that we've kind of sanctioned on it is from Fort Saskatchewan to Pipestone. Ultimately, again, we see a lot of liquids coming from BC, and we would like to extend our reach into BC, and that's part of the collaborative effort that we're working with NorthRiver Midstream on to have KAPS would be likely extended out to the border around Gordondale, that general vicinity. Then, NorthRiver Midstream could gather liquids and deliver into KAPS at Gordondale. Part of the reasoning for that is just looking at the regulatory environment and trying to keep it as an Alberta-regulated pipeline at this point.
Pat, go ahead.
Sure. I think everyone should have to wear their cap while,
Oh, look at that.
Yeah, nice.
I like that trend.
David, now that you've called the bottom for Canadian energy, are you also calling the bottom for your south region G&P contributions, or do you see a little bit more downside risk as you execute on some of these optimizations? Maybe you can just walk us through some of the consolidation plans, which plants might be accepting more volumes, Rimbey, Brazeau.
Let me first say that we're not, at this point, ready to talk any further specifics. Dean mentioned that we have suspended operations at Gilby and the volume from Gilby, most of the volumes from Gilby are now moving through Rimbey, and that's actually worked out well for us and for our customers. The advantage we have in the network, as Dean alluded to earlier, is the network that we have. We have the ability to accommodate volumes without having to spend a lot of capital and increase the utilization of the facilities as we rationalize and optimize. We owe it to our employees and to our customers to communicate our specific plans to them first. As we make these decisions, that's what we'll do, and then we'll be in a position to talk about it more specifically.
In terms of calling the bottom, Pat, as Dean mentioned earlier, the geology in this area is still very robust. It is liquids-rich gas. It's not as liquids rich as what you see in the Montney up around Grande Prairie. It's not as rich in condensate. Nevertheless, the economics are still healthy at a reasonable natural gas price and reasonable liquids prices. One of the challenges in that area is a lot of the producers have been living within cash flow, and their cash flows really haven't been sufficient to do much drilling. We see that as things evolve, we see that changing, and we still think it's the right place to be long term. Dean, I don't know if you want to add to that.
No.
Speaking of bouncing off bottom, Jamie, maybe you can comment on what caused the recent rally in the butane market and also maybe just a little bit more color on how you see butane prices shaping up for 2020?
Yeah, for sure. I know I'll have to be very careful here because we're out contracting right now. Well, certainly with respect to the most recent rally in butane, it's a function of two things. One, we have some players in the market that were, frankly, net short for purchasing their requirements. That was throughout the contract year, which just amongst us, had us scratching our head because how much lower can it go than what it was this spring? There are some very meaningful players that did not purchase all their requirements. Also, butane's a very seasonal product, so you would traditionally see the wintertime having prices rally. We've seen recently the spot price come off
As well, probably book 10% off of WTI. We expect that as we recontract into 2020, we're going to have to look at it from an annual view. I think I need to stop talking right there.
I would say, though, if you look back at last year, Pat, we had an unprecedented situation with butane where both refiners were down for extended period of times for their maintenance outages. Usually that doesn't happen in the same year. We had an outage at our AEF facility as well. What happened was that a lot of the butane supply went into storage and basically all the butane storage in province were full. That's what really cratered the butane prices last year coming into 2020. Into this year, we've consumed a lot more of it in the province, but a lot of it's been exported off the West Coast, and we are exporting it through our Hull facility in the U.S. as well to clear it out of this market. Now we're at more of a balanced stage of where inventory levels are.
Obviously all the facilities are up and running, so that's all positive in terms of those balances. We're still oversupplied butane in our province, so that means that it likely has to trade at a discount to the major markets like Mont Belvieu because it's got to pay for that transportation price to clear. When you add all that together, we're going to have stronger prices than what we saw in 2019 going into 2020, but they'll still trade likely at a discount to the major indices.
Yeah, I think just to supplement that is that we're oversupplied in Western Canada, but we're also significantly oversupplied in North America. When we saw the opportunity back in Well, when a lot of people saw the opportunity to export barrels down into the Gulf Coast and the price was much stronger then than it is now. If we look at it from a holistic perspective, we fully don't expect that butane in the short term is going to be back to a level that we would have seen a couple of years ago. To Dean's point, certainly there's no expectations that we would see a similar phenomena as we saw this past year as well.
If I could just squeeze in.
Well, Pat's going to ask one more.
Go ahead, Pat.
Just real quick for Steven, the CAD 5 million-CAD 600 million of self-funded CapEx going forward. Would you have a target DCF per share growth range off of that? Also, if you were to flex that up, instead of using the DRIP, could you just potentially tap into the hybrid market?
As you can appreciate, we had lots of internal discussions as to what to share at Investor Day. At the end of the day, we're not prepared to do that. We want to rely on our track record. Even during the last five or six years, the tough times, still delivering 9% CAGR on cash flow per share and 9% on dividends. We thought we'd let the track record stand for itself. I think that's a fair question. I did bring my notepad up, I can't remember your second question.
Hybrids.
Hybrids. Yeah, no, as we went out on the market back in June, even back then, we said there was CAD 300 million-CAD 400 million of capacity left in that hybrid preferred share basket that we could still tap into. That kind of projection that we showed on that slide did incorporate a steady use of hybrids as equity increased over time. The context of that slide, the second to last slide in that finance section, was the overall goal to still have a reasonable leverage ratio through time as to what we were sort of looking at as we sort of geared towards what kind of ranges could be out there. I would say, pretty conservative assumptions on timing of growth projects and how long it takes to bring a project on, as well as investment multiples.
We were trying to make sure that we had a pretty confident range we could put out there to look at funding ability.
We'll let Ian ask the question, then we'll go to Robert.
Ian Gillies, Stifel First Energy . Just curious, with respect to the gas processing optimization, will that carry relatively similar paybacks of 10%-15% return on capital to other parts of your business, or should we be thinking about that differently as you perhaps put that capital in the work to go about that?
Yeah, we'd certainly expect the returns to be fairly robust. Again, the redundant costs that we incur with having so many facilities that are not very well utilized or half utilized, that cost is significant. As David mentioned, most of our facilities are pipeline interconnected, so the amount of capital that we need to invest to capture that cost optimization isn't significant, though we believe the return on those initiatives would be very strong.
Yeah. That's helpful. With respect to AEF and a potential expansion or, I know it's early days, but is it at 20 or is it something larger or is it something smaller? Are you able to provide any additional details there?
No, we have a team looking at it, and we've looked at a lot of different alternatives. We haven't landed on one definitive one to say that would be optimum. I do want to make sure it's clear, though, that we need to have the right contractual backing for us to move forward on a project like that.
If I could just maybe ask one quick follow-up to that point. Does that mean you'd be giving up the upside on the marketing by going through that sort of contracting style?
Yeah, potentially on an expansion. That's not to say that we wouldn't leave some marketing exposure on the existing capacity that we have today. Again, we're trying to manage the financial parameters that Steven's laid out for us and make sure that we achieve that result going forward. Again, part of that's the contractual structure.
Thank you.
Yeah.
The thing I'd add, too, though, is just that we understand the markets very well, so wouldn't want people to go away thinking that the fee for service would be the only value that Keyera would be able to garner if we were to pursue an expansion at AEF.
Yeah. At the end of the day, what you're trading off is the multiple that someone's attaching to an iso-octane today, value chain, versus the multiple that the market puts on a solid fee for service with solid counterparty on the other side. That's the trade-off that we would have to continue to evaluate and as just one aspect of the whole overall evaluation.
Yes. First, starting on the Gathering and Processing side of your business. You talked about it being a high degree of competition with others, and you'd selectively approach new growth. We think about the types of things you've done in the past. You've been more recently building long-term contracted facilities, but going further back, you've been a consolidator of plants here or there. What should we be expecting from you, with more of this selective growth profile?
Well, I'll maybe take a shot at that first and invite Dean to share his thoughts, Robert. I think Dean's comment about the competitiveness is relative to our liquids infrastructure. Keyera still has some very strong competitive advantages in gathering and processing. It's just that the nature of the environment that we're in, if you're talking about a relatively simple sweet gas plant, the barriers to entry aren't what they are in the liquids side of our business. We see producers still building their own facilities, particularly in areas where the gas is sweet, and doesn't have the complexities. That's why we chose specifically to focus on the area of the Montney around Grande Prairie, where the gas has significant amount of H2S as well as water and condensate. The complexities associated with building the infrastructure to handle gas like that are considerable.
The footprint that we've created means that we do have competitive advantages relative to other alternatives in the area. I think we've had a concerted effort to invest capital in that area to create that footprint. We're very happy with the contractual arrangements that we have and with the execution that we've seen. I think as we look forward over the next three or four years, we're probably going to be investing less there and more on the liquids infrastructure side. That's just a natural result of the fact that's where we've been focused. It's not as though we're saying that that's not a strategic area for us long term. It's just that in the next few years, it's not likely to be where we're going to be investing the bulk of our capital.
Is that just based on what you see as the opportunities, or is that a concerted decision to allocate capital more towards the liquids infrastructure side of the business?
I would say it's probably both. We probably see more opportunities as we've laid out here on the liquids infrastructure side, and it's a conscious rebalancing of the capital investment, based on what we've been up to in the last three or four years.
Can I just finish the question on the U.S. side of things? You talked about building out what you've got on your plate right now and in many ways proving the investment thesis. Just with the Wildhorse timing, is it fair to say that it's not likely, or you're not targeting any material acquisitions in the U.S. for the next two, three years?
I think Jamie mentioned in his remarks that our approach right now is going to be to, over the course of the next year or two, is to see what these assets can do for us and make sure that we can execute and generate the kinds of returns that we expect. Never say never, but I wouldn't expect that you'd see anything further from us on the U.S. side in the near term. Having said that, we're always looking at acquisition opportunities, and if they fit the criteria that we've talked about, it's certainly something that would be on the table.
Thank you.
Yeah, Robert, just to add to that. I see it sort of a walk before we run strategy, really demonstrate success with what we have. We've built a very strong team down south, and Brad Slessor is standing in the back room, and he runs that group. When I look at that group now, it reminds me a lot of Keyera back when it first started in 2008, when we were a lot smaller. Now they're pursuing a lot of small, high-return projects. Where we have footprints already, they'll just keep on connecting onto that and generate high returns. That would be my expectation. Over the next couple of years, I expect that they're going to deliver very strong results from that business. From there, we can decide what we want to do.
Hi there, it's Dean Highmoor from Mackenzie Investments. Just had a question relating to your southern gathering and processing assets. What would be the typical reclamation and abandonment costs for a gas facility?
I think that's a question that we could turn over to Bradley Lock, our Chief Operating Officer.
Well, certainly it varies facility by facility. The more complex facilities, the longer they've been in existence, typically the longer the reclamation. The one we're digging into right away is Nevis. Our Nevis facility we shut down here in September of this year and are just starting to put together a reclamation plan. The nice thing about those reclamation plans is they tend to be longer in scale. Nevis is probably going to be a five-year plan of taking it from where it's at today through to its deconstruction and environmental liability, and then a monitoring program to follow onto that until we actually get back to a totally reclaimed site. In any individual year, the cost to manage that is not significant.
Spread over time, you can get onto a larger facility to the CAD 30 million-CAD 40 million range for some of those facilities if you spread it out over a long period of time. I think one of the strategies, though, as we look through the West Central optimization, the gas that's being produced out of that area, we still want to continue to funnel into key assets. While the individual gas plant may not be running, a lot of the infrastructure that will feed into that facility will still continue to run, be it compressor stations, be it dehydration, be it pipeline connectivity or terminals. Consequently, as the facility continues to run, there's no obligation to immediately reclaim it down to a state of ultimate reclamation.
That allows us the flexibility to, if we don't see a need for that facility in the future, as Dean mentioned, our goal is to try to preserve as much of that capacity as we can. If we don't see a need for that, then we can slowly chip away at a reclamation at a pace that we see valuable and leave that out over the next five, 10, 15, 20 years.
One thing I would mention in that context is that the estimated cost associated with the deconstruction and reclamation of every one of our sites is fully provided for in the asset retirement obligation on the balance sheet. At this point, we certainly haven't seen any evidence that we haven't got the appropriate amount already provided for on the balance sheet.
Thank you. Just a question for Brian, on the condensate outlook. You had a slide that showed the supply and demand for condensate to 2040. I think at 2035, you had the condensate supply starting to roll over. What were the key factors driving that?
Well, again, I think we see growth in the market for sure here over the near term, and that just happens to be some of the third-party data that we got. I think if we get some of the export pipelines that we see, the oil sands will grow. The biggest value with the oil sands is that the reserves are certain. They're long-lasting, and it's not like you're drilling in the Permian where you're chasing a bunch of declines. The oil sands has a very steady production curve to it. I think we believe, and I think the industry would believe that if there's export options, the oil sands will continue to grow, and with that, diluent demands will grow.
Totally agree with you on the demand side. Just I think the condensate supply that you had in there from the WCSB is starting to decline in 2035. I'm more interested in that delta.
Well, that's a long-term view.
Yeah. When we put those slides together, we took third-party projections. I think once you get out to 2035, it's a pretty inexact science in terms of figuring out, are we going to see continued development of the liquids rich, the condensate rich gas in those areas of the basin, or is the development going to go in a different direction? I think it was probably just a typical conservatism when estimating the production outlook.
Thanks.
Elias Foscolos from Industrial Alliance. Dean, you presented opportunities within four hydrocarbon molecules, ethane, propane, butane, condensate. If I can call that molecule. You ordered them in terms of sort of their complexity. If you had to reorder those slides in terms of financial impact and likelihood of projects coming online, should we think of them a little differently, like in reverse order? Thought I would just try to throw that question out.
That's a complex question.
Well, I didn't make it easy.
I think all the opportunities are significant, and all of the opportunities enhance our base business, as you can see. With ethane and propane and butane, as we create more higher demand markets or access higher demand markets for those products, it leads to more extraction opportunities through our entire value chain in fractionation, storage, and decarbonization, all those things. Every one of them can be very impactful. When we look at condensate, yes, that's a very valuable commodity. Again, that heavy density is an issue. We have to marry that with the complexity of the solution and being able to get a contractually underpin and everything else. Every one of them has its own, I guess, complexities to it. I think any one of them could be very impactful to our business.
I should say on the condensate solution, we're talking a condensate splitter. It's known technology. It's not like we have serial number one on a new technology or something like that. We'll evaluate all these opportunities.
Elias, I'll try and answer your question maybe from a slightly different angle. When I look at it from a strategic point of view, the areas where we have the strongest competitive advantages would be condensate and butane. I think that translates into probably somewhat stronger return expectations from the investments in those value chains. I don't disagree with Dean. I think there's opportunities in every one of those commodities. I think our focus would be on maintaining the lead that we already have with condensate and butane.
I have no further questions online. I think at this point, we will conclude our investor day. Thank you to everyone who took the time to join us. If your schedule allows, please join us for a lunch outside in the lobby. Other than that's a wrap.