CALGARY, Alberta, July 4, 2017 /PRNewswire/ -- Pembina Pipeline
Corporation ("Pembina" or "the Company") (TSX: PPL; NYSE: PBA)
announced that it has placed approximately $2.8 billion of integrated capital projects into
service, including its Phase III pipeline expansion ("Phase III
Expansion") and two connected major delivery points: the Company's
third fractionator at Redwater
("RFS III") and its Canadian Diluent Hub ("CDH").
"At the outset of these projects, we committed to constructing
large-scale, multiyear-build assets on time and on budget, and I'm
proud to say that we've successfully delivered on that promise,
with the overall portfolio coming in under budget by approximately
8 percent and either on time or ahead of schedule," said
Mick Dilger, Pembina's President and
Chief Executive Officer.
Phase III Expansion
The Phase III Expansion, which is underpinned by long-term
contracts with take-or-pay commitments, was placed into service
on June 30, 2017 on time and under budget from the
$2.44 billion expected capital. The
entire Phase III Expansion program, which was initiated in 2013,
included installing over 900 kilometres ("km") of new pipeline
primarily along the Company's existing Peace and Northern system
rights-of-way, as well as upgrading and adding new mainline pump
stations. Initial work for the Phase III Expansion included
debottlenecking segments of existing pipeline systems from
Taylor, British Columbia to
Gordondale, Alberta and adding a
new pipeline from Wapiti to Fox Creek,
Alberta to accommodate increased volumes upstream of
Pembina's Fox Creek tie-in point.
In support of handling the increased product, 420,000 barrels per
day ("bpd") of incremental capacity was added in the Fox Creek to Namao corridor of Alberta through the construction of two
pipelines: a 16 inch and a 24 inch diameter pipeline, each spanning
approximately 290 km.
With the Phase III Expansion now complete, Pembina has four
pipelines between Fox Creek and
Namao, allowing the Company to
transport four distinct hydrocarbons – ethane-plus, propane-plus,
condensate and crude oil – each in its own segregated pipeline,
plus upstream capacity to handle higher volumes driven by the
development of the Montney,
Duvernay and Deep Basin resource
plays.
"Placing our Phase III Expansion into service is an exciting
milestone for Pembina as we've now successfully completed the
largest capital project in our history," said Paul Murphy, Pembina's Senior Vice President,
Pipeline and Crude Oil Facilities. "Our customers will benefit from
the newly increased capacity, as our pipelines were previously
under apportionment, and they will also realize enhanced service
offerings and operational efficiencies from being able to flow
segregated product in separate pipelines. In addition, we will be
able to provide a ratable flow of ethane-plus and propane-plus into
both Pembina and third-party fractionators in the Fort Saskatchewan region, which will help to
optimize operations at these facilities."
In aggregate, Pembina now has over 850,000 bpd of combined
capacity between its Peace and Northern Pipeline systems which
connect into the delivery point at Namao. Given continued customer demand, the
Company recently announced that it secured contracts to add an
additional 180,000 bpd of capacity via the addition of two pump
stations on the new 24 inch pipeline between Fox Creek and Namao through its Phase IV Expansion, subject
to regulatory and environmental approval. It also is working on the
Phase V Expansion, which entails looping its pipeline between Lator
and Fox Creek to provide
additional upstream capacity. Beyond these expansions, which are
expected to be placed into service in late 2018, Pembina is able to
increase capacity on the 24 and 16 inch pipelines in the
Fox Creek to Namao corridor by another 250,000 bpd through
additional pump stations – which would bring total capacity into
the Namao hub to almost 1,300,000
bpd.
RFS III
In conjunction with the Phase III Expansion, RFS III was also
placed into service on June 30,
2017, ahead of schedule and under budget. Backstopped by
long-term, take-or-pay contracts, RFS III added 55,000 bpd of
additional propane-plus fractionation capacity and leveraged the
designs of Pembina's first and second fractionators. Pembina's
Redwater complex now has an
aggregate fractionation capacity of approximately 210,000 bpd – the
largest in the Canadian energy infrastructure sector.
"Based on our customers' volume projections supporting the Phase
III Expansion, we secured contracts to build RFS III so that
pipeline and fractionation capacity would be better aligned within
the Fort Saskatchewan area," said
Stuart Taylor, Pembina's Senior Vice
President, NGL and Natural Gas Facilities. "Along with increased
fractionation capacity with RFS III, our Redwater complex provides customers with
efficient storage and market access through our well-established
facilities at Redwater and our new
Canadian Diluent Hub."
"Looking ahead, we are focused on providing market access
solutions for our customers for the products coming off the back
end of our fractionators – particularly propane – which will
ultimately help add value to the incremental barrels and serve to
increase producer netbacks. In support of this, we are working to
further expand our service offering down the value chain by
proposing to develop both an integrated propylene and polypropylene
production facility and a west coast liquefied petroleum gas export
terminal," concluded Mr. Taylor.
CDH
Also aligned with the in-service of the Phase III Expansion and
RFS III, on June 30,
2017, Pembina placed additional condensate connections at CDH
into service on time and under budget. CDH, which operates
commercially as a fee-based hub, provides direct connectivity for
growing condensate volumes transported on Pembina's pipeline
systems and offers diluent services for oil sands customers.
Currently, the facility's pipelines are capable of delivering
approximately 400,000 bpd of condensate to regional third-party
diluent pipelines, with connections to the Access, Cold Lake, Fort
Saskatchewan (FSPL) and Polaris pipelines. By the end of
2017, CDH is also expected to have additional third-party
connections as well as 500,000 barrels of above ground storage in
operation.
"The Canadian Diluent Hub was driven by the development of the
Montney and Duvernay resource plays in our service areas,"
said Mr. Murphy. "Increasing production from these plays fueled
infrastructure development, such as our Phase III Expansion and RFS
III. With our access to growing condensate supply through our
existing and new infrastructure, customers were supportive of us
expanding diluent market access and service offerings."
Several additional factors supported the development of CDH,
including its Alberta Industrial Heartland location, which is
proximal to oil sands and diluent pipelines, as well as associated
terminals. Development in this location enabled Pembina to avoid
costly and congested construction in the greater Edmonton area. Further, given Pembina had
reached its maximum capacity into the existing Edmonton-area condensate infrastructure, the
Company foresaw that additional infrastructure would be required to
accommodate higher volumes. Through CDH, Pembina now offers
incremental solutions for its customers by expanding on the
condensate services the Company already provides.
Summary
"Looking back only a few years ago when our extensive growth
plans were in their infancy, to the transformation of where our
company is today, I commend all of the hard work and dedication of
our teams who worked tirelessly to achieve such extraordinary
results in bringing our growth plans successfully into fruition –
all while maintaining our outstanding safety record," commented Mr.
Dilger. "I am also very proud of the relationships and trust we
have built over this timeframe with the communities, stakeholders,
customers and First Nations and Métis in the areas where we operate
and look forward to continuing to foster these relationships in the
future."
"Now through 2018 – including growth projects of Veresen,
pending successful close of the transaction we announced in May
this year – we will be placing an additional $3 billion of assets into service on top of the
$2.8 billion we announced in service
today," said Mr. Dilger. "These projects, with their low-risk,
fee-for-service cash flows, will contribute significantly to our
projected adjusted EBITDA for the full year of 2018 between
$2.55 and $2.75 billion."
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 over 60 years. Pembina owns
and operates an integrated system of pipelines that transport
various products derived from natural gas and hydrocarbon liquids
produced primarily in western Canada. The Company also owns and operates gas
gathering and processing facilities and an oil and natural gas
liquids infrastructure and logistics business. Pembina's integrated
assets and commercial operations along the majority of the
hydrocarbon value chain allow it to offer a full spectrum of
midstream and marketing services to the energy sector. Pembina is
committed to working with its community and aboriginal neighbours,
while providing value for investors in a safe, environmentally
responsible manner. This balanced approach to operating ensures the
trust Pembina builds among all of its stakeholders is sustainable
over the long term. Pembina's common shares trade on the
Toronto and New York stock exchanges under PPL and PBA,
respectively. Pembina's preferred shares also trade on the
Toronto stock exchange. For more
information, visit www.pembina.com.
Forward-Looking Statements & Information
This document contains certain forward-looking statements and
information (collectively, "forward-looking statements") 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", "would",
"could", "plans", "anticipates", "schedule", "potential" and
similar expressions suggesting future events or future
performance.
In particular, this document contains forward-looking
statements, including certain financial outlooks, pertaining to,
without limitation, the following: anticipated timing, in-service
dates and capacities for ongoing growth projects; the anticipated
timing acquisition of Veresen; the anticipated benefits of the
acquisition, including anticipated adjusted EBITDA projections for
the combined entity, as well as anticipated synergies; Pembina's
corporate strategy; the ongoing utilization and development
relating to expansions and additions to Pembina's asset base;
financial results related to and growth opportunities associated
with the assets of the combined company after the acquisition of
Veresen..
The forward-looking statements are based on certain
assumptions that Pembina has made in respect thereof as at the date
of this news release, including:, the abilities of the parties to
satisfy the conditions to closing of the Veresen acquisition; that
favourable circumstances continue to exist in respect of current
and future growth projects of Pembina and Veresen (including the
ability to finance operations and such projects on favourable
terms); continued oil and gas industry exploration and development
activity levels and the geographic region of such activity; ongoing
utilization and future expansion, development, growth and
performance of Pembina's business and asset base; future demand for
processing, fractionation and pipeline transportation services and
new opportunities; prevailing commodity prices and exchange rates
and the ability of Pembina to maintain current credit ratings;
future operating costs and cash flow; geotechnical and integrity
costs; that any required commercial agreements can be reached; that
all required corporate, regulatory and environmental approvals can
be obtained on the necessary terms in a timely manner; that
counterparties will comply with contracts in a timely manner; that
there are no unforeseen material costs relating to the facilities
which are not recoverable from customers; interest and tax rates;
prevailing regulatory, tax and environmental laws and regulations;
maintenance of operating margins; the amount of future liabilities
relating to environmental incidents; and the availability of
coverage under Pembina's insurance policies (including in respect
of Pembina's business interruption insurance policy).
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. These forward-looking statements are not
guarantees of future performance and are subject to a number of
known and unknown risks and uncertainties including, but not
limited to: the ability of Pembina and Veresen to receive, in a
timely manner, the necessary court, securityholder, stock exchange
and other third-party approvals; the ability of the parties to
satisfy the other conditions to the Veresen acquisition; the
failure to realize the anticipated benefits or synergies of the
Veresen acquisition following closing due to integration issues or
otherwise, and expectations and assumptions concerning, among other
things: customer demand, planned synergies, capital efficiencies
and cost savings; applicable tax laws; future production rates; the
sufficiency of budgeted capital expenditures in carrying out
planned activities; lower than anticipated results of operations
and accretion from Pembina's business initiatives; the ability of
Pembina to raise sufficient capital; the regulatory environment and
the ability to obtain required regulatory, corporate, environmental
approvals; the impact of competitive entities and pricing; labour
and material shortages; strength and operations of the oil and
natural gas production industry and related commodity prices;
non-performance or default by counterparties to agreements which
Pembina or one or more of its affiliates has entered into in
respect of its business; fluctuations in operating results; adverse
general economic and market conditions in Canada, North
America and elsewhere, including changes in interest rates,
foreign currency exchange rates and commodity prices; and certain
other risks detailed from time to time in Pembina's public
disclosure documents available at www.sedar.com. This list of risk
factors should not be construed as exhaustive. In addition, the
closing of the Veresen acquisition may not be completed, or may be
delayed if the parties' respective conditions to the closing of the
acquisition, including the receipt of all necessary regulatory
approvals, are not satisfied on the anticipated timelines or at
all. Accordingly, there is a risk that the acquisition may not be
completed within the anticipated timeline, or at all, on the terms
currently proposed, or at all.
Readers are cautioned that events or circumstances could
cause results to differ materially from those predicted, forecasted
or projected. 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 contained herein, except as required by
applicable laws. Readers are cautioned that management of Pembina
approved the financial outlooks contained herein as of the date of
this press release. The purpose of the financial contained herein
is to give the reader an indication of the combined company's
financial results, and the information may not be appropriate for
other purposes. The forward-looking statements contained in this
document are expressly qualified by this cautionary
statement.
Non-GAAP Measures
In this news release, Pembina has used certain terms that are
not defined by GAAP but are used by management to evaluate the
Veresen acquisition. Since non-GAAP measures do not have a
standardized meaning prescribed by international financial
reporting measures ("IFRS") and are therefore unlikely to be
comparable to similar measures presented by other companies,
securities regulators require that non-GAAP measures are clearly
defined and qualified. The intent of non-GAAP measures is to
provide additional useful information with respect to the proposed
acquisition to investors and analysts.
In particular, Pembina has used the term adjusted
earnings before interest, taxes, depreciation and amortization
("adjusted EBITDA"). Adjusted EBITDA is a non-GAAP measure and is
calculated as earnings for the year plus share of profit (loss)
from equity accounted investees (before tax, depreciation and
amortization) plus net finance costs, income taxes, depreciation
and amortization (included in operations and general and
administrative expense) and unrealized gains or losses on
commodity-related derivative financial instruments. The exclusion
of unrealized gains or losses on commodity-related derivative
financial instruments eliminates the non-cash impact of such gains
or losses. Adjusted EBITDA also includes adjustments for loss
(gain) on disposal of assets, transaction costs incurred in respect
of acquisitions, impairment charges or reversals and write-downs in
respect of goodwill, intangible assets and property plant and
equipment, and non-cash provisions. These additional adjustments
are made to exclude various non-cash and other items that are not
reflective of ongoing operations. Management believes that adjusted
EBITDA provides useful information to investors as it is an
important indicator of the issuer's ability to generate liquidity
through cash flow from operating activities, and is also used by
investors and analysts for assessing financial performance and for
the purpose of valuing an issuer, including calculating financial
and leverage ratios. Other issuers may calculate this non-GAAP
measure differently. For additional information regarding non-GAAP
measures, including reconciliations to measures recognized by GAAP,
please refer to Pembina's financial reports, which are available on
SEDAR at www.sedar.com and at
www.pembina.com.
All financial figures are in Canadian dollars, unless
otherwise noted.
Pembina Pipeline® is a registered trademark of
Pembina Pipeline Corporation.
For further information: Investor Inquires: Hayley Mckenzie / Chelsy
Hoy, (403) 231-3156, 1-855-880-7404, e-mail:
investor-relations@pembina.com, www.pembina.com; Media Inquiries:
Victoria Person, (403) 231-3148,
e-mail: media@pembina.com