CALGARY, June 27, 2013 /PRNewswire/ - Pembina Pipeline
Corporation ("Pembina" or the "Company") (TSX: PPL; NYSE: PBA)
announced today that it has entered into an Engineering Support
Agreement ("ESA") for diluent and blended bitumen transportation
services associated with enhanced oil recovery developments in
northeast Alberta owned by KKD Oil
Sands Partnership ("KOSP"). KOSP is a partnership between Statoil
Canada Ltd. ("Statoil"), as managing partner, and PTTEP Canada
Ltd.
Concurrent with the work under the ESA, Pembina and Statoil will
proceed with negotiations to conclude long-term agreements for the
construction of and transportation service on a new greenfield
pipeline system and associated infrastructure (the "Cornerstone
Pipeline"). The Cornerstone Pipeline would transport diluent and
blended bitumen between KOSP's upstream developments and the
Edmonton area, including diluent
connectivity at Pembina's Nexus Terminal ("PNT"). PNT interconnects
Pembina's various terminalling infrastructure located in the
Edmonton, Redwater and Fort
Saskatchewan areas. It provides unparalleled access to the
diverse crude oil grades produced in western Canada. In addition, it is connected to
condensate grades transported on third-party and Pembina pipeline
systems, including imported pipeline supplies. The access and
connectivity of PNT provides the broadest array of diluent and
diluent services available to Pembina's oil sands customers.
"This marks an important step forward in Pembina's oil sands and
heavy oil transportation business," said Bob Michaleski, Pembina's Chief Executive
Officer. "We continue to increase our access to diluent sources,
both in the Edmonton, Alberta area
via our Midstream business and through expansions of our Gas
Services assets and Conventional Pipeline systems. This, combined
with our ongoing major pipeline system construction experience,
puts us in a strong position to support KOSP's oil sands
development. The ESA allows us to lay the groundwork for a
substantial infrastructure expansion, which, should it proceed,
will provide Pembina with an exciting new oil sands platform that
will generate long-term shareholder value."
Under the ESA, Pembina and KOSP have jointly agreed to spend up
to approximately $35 million to
conduct preliminary engineering work and begin associated
stakeholder consultation in support of KOSP's transportation needs.
At the conclusion of the work contemplated under the ESA, Pembina
expects to be in a position to file the necessary applications to
proceed with constructing the Cornerstone Pipeline. Subject to
reaching commercial agreements, as well as obtaining regulatory and
environmental approvals thereafter, Pembina expects the Cornerstone
Pipeline could be in-service in mid-2017.
"Our preliminary capital cost estimate to undertake construction
of a 320 kilometre 12" diluent and 24" blended bitumen pipeline
system is approximately $850
million," said Michael
Hantzsch, Vice President, Oil Sands & Heavy Oil. "This
size of pipe would allow us to phase-in expansions down the road
with incremental capital. We also may consider up-sizing the
pipelines to 20" and 30", respectively, should the work conducted
under the ESA indicate there are sufficient volumes."
The Cornerstone Pipeline will be connected to KOSP's Cheecham
Terminal and Pembina Midstream Limited Partnership ("PMLP"), a
subsidiary of the Company, is expected to be a 50-percent shipper
on the diluent pipeline alongside KOSP. The shippers on the
pipeline system will have exclusive use of the terminal, enabling
Pembina to offer additional value-added third-party services,
including much needed new sources of condensate and synthetic crude
oil diluent for use by area producers, as well as a number of
options for blended product. PMLP will be working with regional
customers to develop and contract for terminalling services, which
will include diluent supply and blended bitumen transportation out
of the area.
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 and 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 span 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.
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
"expects", "will", "estimate", "expand", "would", "could",
"possible" 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 business objectives;
the planned capacity and routing of the proposed Cornerstone
Pipeline; the expected cost of the preliminary engineering work and
stakeholder consultation; the anticipated capital cost of the
Cornerstone Pipeline; the expected in-service date of the
Cornerstone Pipeline; the ability of Pembina to offer and contract
for terminalling services at KOSP's Cheecham Terminal; 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 services; and expectations
regarding supply and demand factors and pricing for oil and natural
gas. 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 services; future levels of oil and
natural gas development; potential revenue and cash flow
enhancement; future cash flows; and the ability of the parties to
agree on binding commercial arrangements in respect of the
Cornerstone Pipeline and terminalling arrangements at KOSP's
Cheecham Terminal.
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.
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.
All financial figures are in Canadian dollars, unless
otherwise noted.
Pembina Pipeline® is a registered trademark of Pembina
Pipeline Corporation.
SOURCE Pembina Pipeline Corporation