Long-term, fee-for-service contracts underpin new fractionator, new deep
cut facility and increased pipeline capacity to meet growing demand for
NGL services
(All financial figures are approximate and in Canadian dollars unless
otherwise noted.)
CALGARY, March 5, 2013 /CNW/ - Pembina Pipeline Corporation ("Pembina"
or the "Company") (TSX: PPL; NYSE: PBA) announced plans today to
proceed with an expansion of its existing natural gas liquids ("NGL")
infrastructure at a combined capital cost of approximately $1 billion.
Pembina's expansion comprises three integrated components along the NGL
value chain, as follows:
-
the twinning of its 200 million cubic feet per day ("MMcf/d") Saturn
deep cut facility ("Saturn II") to extract valuable NGL from raw gas
streams in the Berland area of Alberta;
-
the twinning of its 73,000 barrel per day ("bpd") ethane-plus
fractionator ("RFS II") at its Redwater site, near Fort Saskatchewan,
Alberta; and
-
the Phase II NGL pipeline capacity expansion of its Peace/Northern NGL
System to accommodate increased NGL volumes.
"These projects mark the next stage of our growth in the NGL business,"
said Bob Michaleski, Pembina's Chief Executive Officer. "The projects
are all extremely complementary and position us well to offer
integrated services across the NGL value chain. With our existing
ethane-plus infrastructure and marketing capability, we can offer a
competitive, cost-effective solution for incremental ethane-plus
production from the Western Canadian Sedimentary Basin."
Combined, the Company expects these projects to contribute between $125
and $135 million of long-term, fee-for-service EBITDA per year once
fully operational. Pembina also anticipates $10 to $30 million of
long-term product margin EBITDA to be generated annually by these
expansions. With the addition of these projects, Pembina has increased
its 2013 capital spending plan to approximately $1.04 billion from the
previously announced budget of $965 million.
Saturn II
Pembina has entered into agreements with a third-party producer to
proceed with Saturn II at a capital cost of approximately $170 million.
Saturn II will leverage engineering work completed for the original
Saturn facility. As such, Pembina expects the project could be
in-service by late 2015, subject to regulatory and environmental
approvals.
The agreement with the third-party is a firm-service contract for 130
MMcf/d (approximately 65% of the facility's total capacity) for a term
of 10 years. Based on 100% capacity, Saturn II is expected to extract
approximately 13,000 bpd of NGL which will be transported on the same
pipeline lateral Pembina is currently constructing for Saturn I.
RFS II
With RFS II, Pembina will essentially be twinning the Company's existing
Redwater Fractionator to address a portion of the anticipated shortfall
in fractionation capacity within the Fort Saskatchewan, Alberta area.
Subject to regulatory and environmental approvals, Pembina expects RFS
II to be in-service late in the fourth quarter of 2015 at an estimated
cost of $415 million.
Under the agreements signed with producers, Pembina will receive
committed take-or-pay operating margin for an initial 10-year term from
the in-service date. Contracts for 97% of the operating capacity have
been secured. Ethane produced at RFS II will be sold under a long-term
arrangement with NOVA Chemicals Corporation ("NOVA Chemicals").
"We are pleased to continue our relationship with Pembina through this
arrangement," said Grant Thomson, President, Olefins & Feedstock for
NOVA Chemicals. "The new fractionator is much needed and will enable
more value-adding activity to occur within the Province. As the ethane
supply from RFS II is based on field sources, it also supports further
diversification of our feedstock sources, and positions NOVA Chemicals
well for future growth."
With the acquisition of Provident Energy Ltd. ("Provident") in April,
2012, Pembina entered into the fractionation business and was able to
offer a fully integrated NGL service to its customers, from wellhead to
the consumer gate. At the time, the Company announced plans to expand
fractionation capacity at its Redwater site to support increasing
demand. "The opportunity to develop RFS II was a key driver in our
acquisition of Provident," said Mick Dilger, Pembina's President and
Chief Operating Officer.
Phase II NGL Pipeline Capacity Expansion
To support increasing NGL volumes, Pembina is proceeding with its
proposed Phase II NGL pipeline capacity expansion on its Peace/Northern
NGL System. The Company is currently completing the Phase I expansion,
which will increase NGL capacity on the Peace/Northern NGL System by 45
percent to 167,000 bpd by October 2013. The Phase II NGL Expansion will
increase capacity from 167,000 bpd to 220,000 bpd. In total, the Phase
I and II expansions are expected to increase NGL transportation
capacity by 90 percent. Subject to obtaining regulatory and
environmental approvals, Pembina expects this expansion to cost
approximately $415 million (including mainline and tie-in capital) and
to be complete in early to mid-2015.
In addition, subject to regulatory and environmental approvals, Pembina
will be constructing a new approximately 30 kilometre lateral into the
Ferrier region to tie a third-party's facility into Pembina's Brazeau
Pipeline System.
Open Season
The Company's previously announced pipeline expansions are being
undertaken to help provide adequate transportation capacity to support
western Canada's growing energy industry. As Pembina has obtained
customer support for these pipeline expansions and with a shortfall
still being projected in pipeline capacity, Pembina will conduct an
Open Season for additional crude oil, condensate and NGL pipeline
expansions from Taylor, British Columbia to the Edmonton/Fort
Saskatchewan areas of Alberta. The Company will announce further
details in the coming days with respect to the Open Season.
About Pembina
Calgary-based Pembina Pipeline Corporation is a leading transportation
and midstream service provider that has been serving North America's
energy industry for nearly 60 years. Pembina owns and operates:
pipelines that transport conventional and synthetic crude oil and
natural gas liquids produced in western Canada; oil sands, heavy oil
and diluent pipelines; gas gathering and processing facilities; and, an
oil and natural gas liquids infrastructure and logistics business. With
facilities strategically located in western Canada and in natural gas
liquids markets in eastern Canada and the U.S., Pembina also offers a
full spectrum of midstream and marketing services that spans across its
operations. Pembina's integrated assets and commercial operations
enable it to offer services needed by the energy sector along the
hydrocarbon value chain.
Pembina is a trusted member of the communities in which it operates and
is committed to generating value for its investors by running its
businesses in a safe, environmentally responsible manner that is
respectful of community stakeholders.
Pembina provides monthly cash dividends to its shareholders. Pembina's
common shares and convertible debentures are traded on the Toronto
Stock Exchange under the symbols PPL, PPL.DB.C, PPL.DB.E and PPL.DB.F
respectively. Pembina's common shares are traded on the New York Stock
Exchange under the symbol PBA.
Forward-Looking Statements & Information
This document contains certain forward-looking statements and
information (collectively, "forward-looking statements") within the
meaning of the "safe harbor" provisions of applicable securities
legislation that are based on Pembina's current expectations,
estimates, projections and assumptions in light of its experience and
its perception of historical trends. In some cases, forward-looking
statements can be identified by terminology such as "plans", "expects",
"proposes", "projects", "will", "estimates", "anticipates", "develop",
"could" and similar expressions suggesting future events or future
performance.
In particular, this document contains forward-looking statements,
including certain financial outlook, pertaining to, without limitation,
the following: Pembina's corporate strategy; the capital cost, planned
extraction capacity and in-service date of Saturn II; the capital cost,
planned operating capacity and in-service date of RFSII; the
construction schedule, capital cost and planned capacity of the Peace/
Northern NGL System Phase I and II expansion projects; the ongoing
utilization and expansions of and additions to Pembina's business and
asset base, growth and growth potential; expectations regarding future
demand for transportation, extraction and fractionation services;
expectations regarding supply and demand factors and pricing for oil
and natural gas; potential revenue and cash flow enhancement; and
future cash flows, maintenance and operating margins. These
forward-looking statements and information are being made by Pembina
based on certain assumptions that Pembina has made in respect thereof
as at the date of this document including those discussed below.
With respect to forward-looking statements contained in this document,
Pembina has made assumptions regarding, among other things: ongoing
utilization and future expansion, development, growth and performance
of Pembina's business and asset base; future demand for transportation,
extraction and fractionation services; future levels of oil and natural
gas development in proximity to Pembina's pipelines and other assets
(which could be affected by, among other things, possible changes to
applicable royalty and tax regimes); the amount of future liabilities
related to environmental incidents; the availability of coverage under
Pembina's insurance policies (including in respect of Pembina's
business interruption insurance policy); future acquisitions, growth
and growth potential in Pembina's operations; potential revenue and
cash flow enhancement; future cash flows; maintenance of operating
margins; additional throughput potential on additional connections and
other initiatives on the Conventional Pipelines systems; expected
project start-up and construction dates; future dividends and taxation
of dividends; future financing capability and sources; and negative
credit rating adjustments.
Although Pembina believes the expectations and material factors and
assumptions reflected in these forward-looking statements are
reasonable as of the date hereof, there can be no assurance that these
expectations, factors and assumptions will prove to be correct. Readers
are cautioned that events or circumstances could cause results to
differ materially from those predicted, forecasted or projected. By
their nature, forward-looking statements involve numerous assumptions,
known and unknown risks and uncertainties that contribute to the
possibility that the predictions, forecasts, projections and other
forward-looking statements will not occur, which may cause actual
performance and financial results in future periods to differ
materially from any projections of future performance or results
expressed or implied by such forward-looking statements and
information.
None of the forward-looking statements described above are guarantees of
future performance and are subject to a number of known and unknown
risks and uncertainties, including, but not limited to: the impact of
competitive entities and pricing; reliance on key industry partners,
alliances and agreements; the strength and operations of the oil and
natural gas production industry and related commodity prices; the
continuation or completion of third- party projects; regulatory
environment and inability to obtain required regulatory approvals; tax
laws and treatment; fluctuations in operating results; lower than
anticipated results of operations and accretion from Pembina's
business initiatives; reduced amounts of cash available for dividends
to shareholders; the ability of Pembina to raise sufficient capital (or
to raise capital on favourable terms) to complete future projects and
satisfy future commitments, including the construction and
commissioning of the Saturn and
The forward-looking statements contained in this document speak only as
of the date of this document. Pembina does not undertake any obligation
to publicly update or revise any forward-looking statements or
information contained herein, except as required by applicable laws.
The forward-looking statements contained in this document are expressly
qualified by this cautionary statement.
SOURCE: Pembina Pipeline Corporation
