(All financial figures are approximate and in Canadian
dollars unless otherwise noted.)
CALGARY, Nov. 28, 2013 /CNW/ - Pembina Pipeline
Corporation ("Pembina" or the "Company") (TSX: PPL; NYSE: PBA)
announced that its Board of Directors has approved a capital
spending plan of approximately $1.5
billion for 2014. This is approximately 56 percent higher
than last year's capital budget and represents the largest in the
Company's history.
"Pembina's capital spending plan for 2014 is indicative of the
substantial suite of growth projects we have before us, the
majority of which are under long-term, fee-for-service agreements,"
said Mick Dilger, President and
Chief Operating Officer. "This investment is directly aligned with
our goal of providing long-term and sustainable value to our
shareholders."
The Company's 2014 capital plan is largely driven by its success
in securing growth opportunities in 2013. Approximately
$1.3 billion, or 85 percent of the
total capital, is associated with previously announced
projects.
2014 Capital Spending Highlights
Pembina's 2014 capital spending plan is expected to be allocated
as follows:
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($ millions) |
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2014 Budget |
Conventional Pipelines |
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670 |
Oil Sands & Heavy Oil |
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60 |
Gas Services |
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260 |
Midstream |
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510 |
Total |
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1,500 |
Conventional Pipelines
Pembina plans to spend approximately $670
million in its Conventional Pipelines business, 44 percent
of its overall 2014 capital spending plan. The spending will be
primarily directed to major projects, as follows:
- Pembina expects to spend $215
million in 2014 to complete its previously announced Phase
II Low Vapour Pressure Expansion, which will increase crude oil and
condensate capacity on the Company's Peace Pipeline by 55,000
barrels per day ("bpd"). Completion is expected by late-2014, at
which time the Peace Pipeline will have a capacity of 250,000 bpd.
This expansion will accommodate increasing crude oil and condensate
volumes resulting from continued producer activity in the crude oil
and condensate-rich areas of the Montney resource play in the Dawson Creek, Grande
Prairie and Kaybob/Fox
Creek areas, as well as development of the condensate-rich
Duvernay resource play in the
Kaybob area.
- The Company expects to spend $240
million in 2014 to progress its previously announced Phase
II NGL Expansion on its Peace and Northern natural gas liquids
("NGL") Pipelines (the "Peace/Northern NGL System") to add an
additional 53,000 bpd. Completion is expected by mid-2015, at which
time the Peace/Northern NGL System will have a capacity of 220,000
bpd. This expansion will provide increased transportation capacity
for producer activity focused on NGL development, which continues
to be strong in the Deep Basin Cretaceous, Montney and Duvernay resource plays.
- Pembina also expects to spend $95
million to complete its previously announced Simonette
Pipeline Expansion on its Peace Pipeline between Simonette and
Fox Creek, Alberta. The new
pipeline is expected to be in-service in the third quarter of 2014,
subject to the necessary environmental and regulatory approvals.
Once this new pipeline is completed, Pembina will have three
pipelines in the corridor between Simonette and Fox Creek capable of segregating and shipping
various grades of crude oil, condensate and NGL.
Pembina's Conventional Pipelines business also has plans for
several other new connections and upgrades in 2014 totaling
approximately $120 million. These
investments are aimed at ensuring maximum integration and
optimization of value chain opportunities.
Oil Sands & Heavy Oil
Pembina's expenditures in its Oil Sand & Heavy Oil business
are expected to total $60 million, or
four percent of the overall 2014 budget, and will largely be used
to progress work on the proposed Cornerstone Pipeline under an
engineering support agreement, as previously announced.
Gas Services
Pembina plans to allocate approximately $260 million, or 17 percent, of its 2014 capital
budget to Gas Services. The majority of this investment is directed
to the construction of several new facilities within its Gas
Services business.
- Resthaven Facility - $75 million
is planned to be directed towards completing the 200 million cubic
feet per day ("MMcf/d") (130 MMcf/d net to Pembina) combined
shallow cut and deep cut NGL extraction facility, which is expected
be in-service in the third quarter of 2014;
- Musreau II Facility - $75 million
is planned to be directed towards the 100 MMcf/d shallow cut gas
plant and associated infrastructure, which is expected be
in-service in the first quarter of 2015; and
- Saturn II Facility - $100 million
is planned to be directed towards the 200 MMcf/d 'twin' of the
Saturn I Facility, which is expected be in-service by
late-2015.
By the end of 2014, Pembina expects that its gas processing
capacity will increase to approximately 700 MMcf/d (net).
Midstream
The Company continues to allocate its capital spending in
Midstream on initiatives that increase its fee-for-service
business. For 2014, capital expenditures of $510 million, or 33 percent of the overall
budget, is projected to be spent in Midstream.
In crude oil Midstream, Pembina expects to spend $145 million to expand its current service
offerings and enhance the interconnectivity of the infrastructure
it accesses. Specific projects include:
- $45 million is expected to be
spent in 2014 to expand above ground storage capacity from 310,000
barrels to 850,000 barrels at Pembina's Edmonton terminal, which is expected to be
in-service in mid-2015;
- $50 million is expected to be
spent in 2014 on completing one full-service terminal (scheduled to
come on-stream in 2014) and the initiation of four additional
full-service terminals;
- $15 million is expected to be
directed towards increasing pipeline connections for the Pembina
Nexus Terminal; and
- $15 million is expected to be
directed towards the start of a multi-year infrastructure build-out
at the recently acquired Pembina Heartland Hub site focussed on
unit train crude oil loading, storage and pipeline
connections.
The majority of capital expenditures in the NGL Midstream
business for 2014, which is expected to total $365 million, will be directed towards
construction of Pembina's previously announced RFS II - a 'twin' of
its existing 73,000 bpd fractionator at its Redwater site. The Company also plans to
invest capital to:
- Complete upgrades at the existing Redwater fractionator including an
optimization project that is anticipated to increase the
propane-plus throughput by up to 9,000 bpd; and
- Provide additional third-party storage and terminalling
solutions including development of additional underground storage
caverns.
Capital Spending Summary
During the year ahead, Pembina will continue to focus its
efforts on expanding, diversifying and integrating its assets along
the hydrocarbon value chain to better provide services for its
customers and enhance long-term shareholder returns. Roughly 60
percent of the planned expenditures in 2014 will be directed
towards Pembina's NGL-related value chain activities and the
remaining 40 percent will be directed towards the Company's crude
oil and condensate-related value chain activities.
Commercial and Operational Update
Crude by Rail Activities
In October 2013, Pembina converted
a segment of its existing rail infrastructure at the Company's
Redwater facility, which is
serviced by Canadian National Railway Company, to offer crude oil
unit train service. This service was implemented to facilitate
efficient and cost-effective loading and transportation for the
Company's existing crude oil rail customer. The first crude oil
unit train left the site at the end of October. Pembina plans to
develop further unit train capability at its Heartland Hub site
over the next several years.
"Pembina was able to leverage its existing Redwater facility rail infrastructure to
implement unit train services," said Bob
Jones, Vice President, Midstream - Crude Oil &
Condensate. "It is our understanding that this was the first crude
oil unit train to be moved out of western Canada and we are very proud of this
accomplishment. This service offers our existing and future
customers the benefits of diversified market access, additional
take-away capacity out of the Alberta Industrial Heartland and very
attractive transportation fees. While this currently represents a
fairly small aspect of our business, crude oil loaded onto rail
cars by pipeline is a growth focus for us, as we believe that it
represents an important outlet - complementing export pipelines -
for production from the Western Canadian Sedimentary Basin."
Pipeline Acquisition & Construction
In November 2013, Pembina acquired
a 60 kilometre segment of pipeline that extends north from
Edson towards Fox Creek, Alberta for approximately
$23 million (the "Acquired
Pipeline").
The Acquired Pipeline will be connected to a Pembina-owned
pipeline in close proximity, which reaches south from Fox Creek towards Edson. The two pipelines will form a new NGL
system as part of a strategic initiative for Pembina to increase
its NGL gathering capacity in the area. Once work on the pipelines
has been completed, which is currently anticipated to be
mid-to-late-2015, the Company expects to be able to offer 50,000
bpd of NGL capacity from Edson to
Fox Creek. Volumes from the area
would further support Pembina's plans to expand its pipeline
capacity from Fox Creek into
Edmonton, Alberta (as per its
previously announced Simonette Pipeline Expansion and Open
Season).
Pembina currently owns and operates a second NGL pipeline in the
area, and intends to convert this pipeline to condensate service.
Both pipelines would operate in tandem, providing segregated
condensate and NGL transportation out of the Edson area to Fox
Creek.
"We are very excited to extend our capture area into this
developing region by leveraging our existing asset footprint," said
Paul Murphy, Senior Vice President,
Pipeline & Crude Oil Facilities. "As with our other announced
pipeline expansions, we believe this new capacity will help ensure
our customers have timely access to markets and provide further
support for our development plans associated with the Open
Season."
The Company also recently completed construction of a new crude
oil pipeline in the Drayton Valley,
Alberta area extending from its Buck
Creek pump station into the Willesden Green field. The
pipeline, which was underpinned by an agreement with a third-party,
will be able to service growing volumes of crude oil from the
Willesden Green area, and is anticipated to provide up to 30,000
bpd of capacity. The new pipeline parallels an existing Pembina
pipeline, where the existing pipeline will be converted from crude
oil to condensate service, and will ultimately provide
approximately 16,000 bpd of capacity for producers in emerging
condensate-rich plays, particularly the Duvernay. Pembina expects that the crude oil
and condensate capacity will be available in the first quarter of
2014.
Other Developments in 2013
In addition to the above noted recent developments, during 2013,
Pembina completed and brought into service its Saturn I Facility
and associated infrastructure as well as its Phase I NGL, crude oil
and condensate pipeline expansions and additional underground
storage caverns. The Company also received regulatory approval to
proceed with, ordered long-lead equipment for and began active
construction on its two new gas processing plants - Saturn II and
Musreau II - and its second fractionator, RFS II, each as discussed
above.
The Company's growth plan going into 2014 is backed by a strong
financial position. Pembina was particularly successful over the
past year in accessing both the debt and equity markets, having
raised $400 million in preferred
shares, $345 million in common equity
and $200 million in 30-year notes
during 2013. Pembina also continues to have robust participation in
its Premium Dividend™ and Dividend Reinvestment Plan, which should
raise approximately $275 million for
2013.
"As we embark on our ambitious 2014 capital program, I have a
high degree of confidence given the financial, operational and
commercial successes that we achieved in 2013," added Mr. Dilger.
"We will leverage the lessons we learned constructing Saturn I, our
Phase I pipeline expansions and our crude oil rail loading facility
to help ensure our projects are executed safely and on time and on
budget. In addition, we'll maintain our focus on strong operational
performance and delivering safe, responsible and reliable services
from our existing assets."
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 various hydrocarbon liquids
including conventional and synthetic crude oil, heavy oil and oil
sands products, condensate (diluent) and natural gas liquids
produced 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. 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.
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", "maintain", "targets", "expects", "proposes", "projects",
"will", "estimates", "intends", "anticipates", "develop",
"continue", "could", "potential" 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;
planning, construction, capital expenditure estimates, schedules,
expected capacity, incremental volumes, in-service dates, rights,
activities and operations with respect to planned new construction
of, or expansions in relation to Pembina's 2014 capital spending
plan for each of its business units; Pembina's crude by rail
initiative; Pembina's plans in respect of, and the impact of,
recent acquisitions; 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: oil and gas industry exploration and development activity
levels; the success of Pembina's operations; prevailing commodity
prices and exchange rates and the ability of Pembina to maintain
current credit ratings; the availability of capital to fund future
capital requirements relating to existing assets and projects;
expectations regarding participation in Pembina's dividend
reinvestment plan; future operating costs; geotechnical and
integrity costs; in respect of current developments, expansions,
planned capital expenditures, completion dates and capacity
expectations: that third parties will provide any necessary
support, that any third party projects relating to Pembina's growth
projects will be sanctioned and completed as expected, that any
required commercial agreements can be reached; that all required
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
events preventing the performance of contracts or the completion of
the relevant facilities, and 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. 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. These known and unknown risks and uncertainties,
include, but are not limited to: the regulatory environment and
decisions; the ability of Pembina to raise sufficient capital (or
to raise sufficient capital on favourable terms) to fund future
expansions and growth projects and satisfy future commitments; the
continuation of completion of third-party projects; lower than
anticipated results of operations and accretion from Pembina's
expansion and growth projects and other business initiatives;
reduced amounts of cash available for dividends to shareholders;
increased construction costs, or construction delays, on Pembina's
expansion and growth projects; the impact of competitive entities
and pricing; labour and material shortages; reliance on key
relationships and agreements; the 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; actions by governmental or regulatory
authorities including changes in tax laws and treatment, changes in
royalty rates or increased environmental regulation; 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.
Readers are cautioned that this list of risk factors should not be
construed as exhaustive.
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