Pembina Hikes 2023 Capex as Key Pipeline Plans Hit Milestones

Researched by Industrial Info Resources (Sugar Land, Texas)--Pembina Pipeline Corporation (NYSE:PBA) (Calgary, Alberta) recently outlined a 2023 capital expenditure (capex) program totaling C$730 million (US$539.4 million), about C$480 million (US$354.7 million) of which will go toward its pipeline projects. It is also selling off its stake in a major Canadian pipeline project that carries natural gas liquids (NGL) out of Western Canada's Montney and Duvernay fields. Industrial Info is tracking more than US$1.5 billion worth of projects from Pembina, nearly US$500 million of which is nearing or under construction.

Click on the image at right for a graph detailing Pembina's active projects, by industry sector.

Pembina expects its 2023 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to be between C$3.5 billion and C$3.8 billion (US$2.6 billion and US$2.8 billion), which is down from its forecast of C$3.625 billion to C$3.725 billion (US$2.68 billion and US$2.76 billion) for 2022. The company blamed inflation-adjusted tolls on its conventional pipelines and fractionation facilities for the projected decline, as well as a weaker contribution from crude-oil and NGL marketing, due to lower prices.

Potentially offsetting this decline, Pembina Gas Infrastructure agreed earlier this week to sell its 50% stake in Canada's Key Access Pipeline System (KAPS) to private equity firm Stonepeak Infrastructure Partners (New York, New York) for C$662.5 million (US$484.9 million). Pembina Gas Infrastructure, which was formed in March, is 60% owned by Pembina and 40% owned by KKR & Company Incorporated (NYSE:KKR) (New York).

The 348-mile KAPS is designed to carry up to 130,000 barrels per day (BBL/d) of NGL from Montney and Duvernay to Keyera Corporation's (Calgary) facilities in Fort Saskatchewan, where the NGL is processed into liquefied natural gas (LNG) for export to Asian markets. Keyera holds the other 50% interest in KAPS.

Industrial Info is tracking more than US$1 billion worth of projects associated with KAPS, including a 173-mile stretch and a trio of pump stations. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Project Database can read a detailed project report on the KAPS line, and click here for a list of active projects related to KAPS.

Pembina also acknowledged it could see lower contributions from its Alliance Pipeline system, which it owns 50:50 with Enbridge Incorporated (NYSE:ENB) (Calgary). Pembina and Enbridge are in the process of adding a series of natural gas compressor stations, each valued at US$45 million, on the Alliance mainline to increase throughput capacity from 1.6 billion to 2 billion cubic feet per day of natural gas. Subscribers can read detailed project reports on the stations to be built near Bethune, Saskatchewan; Estevan, Saskatchewan; Valley City, North Dakota; Faribault, Minnesota; and Durant, Iowa.

Much of Pembina's C$480 million (US$354.7 million) capex in its Pipelines Division will go toward Phase VIII of its Peace Pipeline Expansion. The 85-mile expansion will carry up to 160,000 BBL/d of crude and condensate from the central Montney Shale into the Edmonton area of Alberta, and it will be accompanied by a series of pump stations. Current projections put Phase VIII's construction kickoff toward the end of 2023. Subscribers can read a detailed project report on the pipeline expansion, and click here for a list of reports for the remainder of the projects related to Phase VIII.

Of Pembina's remaining projected capital expenditures for 2023, C$100 million (US$73.85 million) will go toward its Facilities Division, C$10 million (US$7.38 million) to its Marketing & New Ventures Division, C$50 million (US$36.9 million) to corporate, and C$90 million (US$66.54 million) to equity-accounted investees.

Pembina's 2023 capital investment program represents an increase of roughly 11.5% from its 2022 program.

Subscribers to Industrial Info's GMI Project Database can click here for a full list of detailed reports for projects mentioned in this article, and click here for a full list of related plant profiles.

Subscribers can click here for a full list of reports for active Pembina projects.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).