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