Pembina Pipeline reports 'record' annual results in 2018

Pembina Pipeline Corporation continues to advance its strategy to gain access to global markets through the development of infrastructure that would extend its service offering further along the hydrocarbon value chain, company officials said Friday morning.

Mick Dilger, Pembina's president and chief executive officer, said the recently approved $4.5 billion PDH/PP facility, a joint venture with Canada Kuwait Petrochemical Corporation, in Alberta's Industrial Heartland, the Prince Rupert LPG export terminal, currently under construction and the company’s proposed Jordan Cove LNG project are examples of such developments.

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“We’re pursuing new developments that will contribute to ensuring that hydrocarbons produced where we operate can reach the highest value markets throughout the world,” Dilger said during a fourth quarter-year-end 2018 conference call.

Stu Taylor, senior vice-president of marketing and new ventures, said Pembina continues to advance its proposed Jordan Cove LNG project that will transport natural gas from the Malin Hub in southern Oregon to an export terminal.

“We continue to progress the regulatory process. Our teams are continually in contact with both the federal and state permitting bodies. We’re answering questions and we’re progressing all the conversations. We are again hoping to have our commercial ranges completed here in the first quarter. We’ve talked about an equity sale down process of which we will kick off very soon after that and progress that, we hope, quickly,” he said.

“There isn’t a choke point or a bottleneck.”

The company has received a notice of schedule that indicates the Federal Energy Regulatory Commission (FERC) will provide a decision no later than November 2019.

In addition, Pembina executed non-binding offtake agreements for a total of 11 million tonnes per annum (mtpa), which exceeds the planned capacity of 7.5 mtpa. Pembina is working to conclude offtake agreements in the first quarter of 2019.

Pembina continues to anticipate first gas in 2024, pending the receipt of the necessary regulatory approvals, a positive final investment decision and other requirements.

Veresen acquisition ‘transformational’

Pembina delivered strong 2018 financial and operational results leading to record full year earnings and adjusted EBITDA. These results were largely driven by the full-year contribution from assets included in the acquisition of Veresen Inc.

“In 2018 we saw the first full year of contribution from the Veresen acquisition. The acquisition was transformational for Pembina and we are realizing the strategic and financial benefits of the combination,” Dilger said.

The CEO pointed to the Hythe developments project as a glowing example of the synergies that the Veresen acquisition provides.

The project will see Pembina and its 45 per cent owned joint venture, Veresen Midstream Limited Partnership, construct natural gas gathering and processing infrastructure in the Pipestone Montney region.

“The Veresen acquisition was designed to offer Pembina greater diversification and ultimately provide our customers a more comprehensive service offering. I’m very pleased to see this vision come together with the Hythe development project announced in November,” Dilger said.

“This was the first truly integrated deal utilizing Pembina’s full value chain, including natural gas gathering and processing at Veresen Midstream, transmission on Alliance Pipeline and fractionation at Redwater. Integration is at the heart of Pembina’s strategy and we are keen to add more deals like this in the future.”

Collectively, the Hythe developments have an estimated total capital cost of approximately $380 million ($185 million net to Pembina) and have an anticipated in-service date of late 2020, subject to regulatory and environmental approvals.

Fourth quarter and full year earnings of $368 million and $1.3 billion, were a 17 per cent decrease and 45 per cent increase, respectively, over the same periods in 2017.

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