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Pembina Pipeline Corporation To Proceed With $1 Billion Expansion Of NGL Infrastructure

Stocks in this article: PBA PPL

Long-term, fee-for-service contracts underpin new fractionator, new deep cut facility and increased pipeline capacity to meet growing demand for NGL services

(All financial figures are approximate and in Canadian dollars unless otherwise noted.)

CALGARY, March 5, 2013 /PRNewswire/ - Pembina Pipeline Corporation ("Pembina" or the "Company") (TSX: PPL; NYSE: PBA) announced plans today to proceed with an expansion of its existing natural gas liquids ("NGL") infrastructure at a combined capital cost of approximately $1 billion.

Pembina's expansion comprises three integrated components along the NGL value chain, as follows:

  1. the twinning of its 200 million cubic feet per day ("MMcf/d") Saturn deep cut facility ("Saturn II") to extract valuable NGL from raw gas streams in the Berland area of Alberta;
  2. the twinning of its 73,000 barrel per day ("bpd") ethane-plus fractionator ("RFS II") at its Redwater site, near Fort Saskatchewan, Alberta; and
  3. the Phase II NGL pipeline capacity expansion of its Peace/Northern NGL System to accommodate increased NGL volumes.

"These projects mark the next stage of our growth in the NGL business," said Bob Michaleski, Pembina's Chief Executive Officer. "The projects are all extremely complementary and position us well to offer integrated services across the NGL value chain. With our existing ethane-plus infrastructure and marketing capability, we can offer a competitive, cost-effective solution for incremental ethane-plus production from the Western Canadian Sedimentary Basin."

Combined, the Company expects these projects to contribute between $125 and $135 million of long-term, fee-for-service EBITDA per year once fully operational. Pembina also anticipates $10 to $30 million of long-term product margin EBITDA to be generated annually by these expansions. With the addition of these projects, Pembina has increased its 2013 capital spending plan to approximately $1.04 billion from the previously announced budget of $965 million.

Saturn II

Pembina has entered into agreements with a third-party producer to proceed with Saturn II at a capital cost of approximately $170 million. Saturn II will leverage engineering work completed for the original Saturn facility. As such, Pembina expects the project could be in-service by late 2015, subject to regulatory and environmental approvals.

The agreement with the third-party is a firm-service contract for 130 MMcf/d (approximately 65% of the facility's total capacity) for a term of 10 years. Based on 100% capacity, Saturn II is expected to extract approximately 13,000 bpd of NGL which will be transported on the same pipeline lateral Pembina is currently constructing for Saturn I.

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