CALGARY, Feb. 16, 2017 /CNW/ – Pembina Pipeline Corporation (“Pembina” or the “Company”) (TSX: PPL; NYSE: PBA) announced today that it has entered into a 20-year infrastructure development and service agreement (the “Agreement”) with Chevron Canada Limited (“Chevron”).
The Agreement includes an area of dedication by Chevron, in excess of 10 gross operated townships (over 230,000 acres), concentrated in the prolific, liquids-rich Kaybob region of the Duvernay resource play near Fox Creek, Alberta. Under the Agreement and subject to Chevron sanctioning development in the region, Chevron has the right to require Pembina to construct, own and operate gas gathering pipelines and processing facilities, liquids stabilization facilities and other supporting infrastructure for the area of dedication, together with Pembina providing long-term service for Chevron on its pipelines and fractionation facilities. Subject to Chevron and regulatory approvals, the infrastructure developed over the term of this Agreement has the potential to represent a multi-billion dollar investment by Pembina.
“This Agreement represents an ideal long-term growth opportunity for Pembina, as it substantially strengthens our competitive positioning in a world-class resource play with long-life hydrocarbon resources, and provides for the opportunity to deploy a significant amount of capital under a low-risk, long-term commercial framework that aligns with our guard rails,” said Stuart Taylor, Pembina’s Senior Vice President, NGL & Natural Gas Facilities. “Being selected as the provider of choice for this service demonstrates the advantages associated with our safety record, relationships with the communities and, integrated service offering.”
Pembina is ideally suited to develop infrastructure under the Agreement, as gas processing facilities will leverage Pembina’s existing 100 million cubic feet per day design, and stabilization infrastructure will be based on the design work for Pembina’s previously announced Duvernay Field Hub, which is already under development for Chevron. Further, Pembina is in the process of building out its downstream capacity, which will give line-of-sight to a full suite of midstream and transportation services for Chevron.
“The Agreement is transformational for Pembina’s Gas Services business, securing a long-term platform for growth supported by one of the largest lease holders in the Duvernay resource play,” said Jaret Sprott, Pembina’s Vice President, Gas Services. “Industry has made significant strides in improving the economic viability of the Duvernay and we are looking to further this progress by building a large-scale, strategic, integrated network of assets. Additionally, the Agreement provides for the opportunity to optimize our business to secure incremental third-party volumes.”
While this agreement and respective obligations of the parties are binding, infrastructure development remains contingent upon Chevron sanctioning, as well as necessary environmental and regulatory approvals.
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. For more information, visit www.pembina.com.