Pembina Bets on Growth Through CCUS, LNG and Pipeline Partnerships

Pembina Pipeline Corp. laid the foundation for potential future growth by securing three partnerships, described as “significant and transformational,” during the first six months of this year.

Cedar LNG

Among the partnerships is a venture with TC Energy Corp. called Alberta Carbon Grid into carbon capture, utilization and storage (CCUS). The Calgary-based pipeline companies proposed building a northern pipeline network and storage hub capable of collecting and disposing of up to 20 million tons/year of industrial exhaust that contributes to climate change.

Pembina also secured half-ownership of the Haisla Nation’s Cedar LNG liquefied natural gas export project on the northern Pacific coast of British Columbia. In addition, it took a role with a native bidder, Western Indigenous Pipeline Group, for ownership of the Trans Mountain oil conduit across Alberta and British Columbia after completing the capacity expansion project.

Pembina management said the partnerships support a “global market access strategy.” The deals “allow for meaningful Indigenous participation in Canadian energy development.”

The partnership projects would “provide an important large-scale infrastructure platform needed for Alberta-based industries to effectively manage their greenhouse gas emissions and contribute positively to a lower-carbon economy,” according to Pembina.

Meanwhile, increasing demand for current company field assets confirms that an industry recovery is under way from the economic shocks inflicted by the Covid-19 virus pandemic, management said. “Activity in the Western Canadian Sedimentary Basin continues to benefit from strengthening commodity prices across all the products within Pembina’s integrated value chain – crude oil, condensate, natural gas, and natural gas liquids – and this has enhanced our confidence in our 2021 outlook.”

However, adverse financial conditions, such as unfavorable currency exchange rate movements, led to the dip in first-half 2021 earnings. Pembina more than replaced the dip with compensation for losing a takeover duel over Calgary peer Inter Pipeline Ltd. (IPL) with Toronto-based Brookfield Infrastructure Partners LP. It collected a C$350-million ($280 million) penalty in July from IPL, which paid the fee for canceling a deal with Pembina to accept Brookfield’s takeover bid.

Pembina reported first-half 2021 earnings of C$574 million ($459.2 million), or C91 cents/share (73 cents). This was down marginally from C$577 million ($461.6 million), or C91 cents/share (73 cents) during the same period of 2020.

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