Pembina Proceeds With Horizon Pipeline Construction
CALGARY, Nov. 9, 2006 (Canada NewsWire via COMTEX News Network) -- Pembina Pipeline Corporation ("Pembina"), a wholly-owned subsidiary of Pembina Pipeline Income Fund (TSX: PIF.UN) announced that it has executed definitive agreements with Canadian Natural Resources Limited ("Canadian Natural") for the Horizon Pipeline. Under the agreements, Pembina will provide dedicated pipeline transportation service of up to 250,000 barrels per day of synthetic crude oil to Canadian Natural's Horizon Oil Sands Project ("the Horizon Project") over an extendible twenty-five year term commencing on the in-service date.
Pembina will construct the Horizon Pipeline and related facilities over three construction phases, the first of which will commence in November 2006. The twinning of Pembina's Alberta Oil Sands Pipeline ("AOSPL") system will be substantially completed during this first construction phase with the installation of approximately 129 kilometers of 24-inch and 30-inch diameter pipeline. Preliminary activities are currently underway in advance of the second and final phases of construction, scheduled over the summer 2007 and winter 2007/2008 construction seasons, which will entail the installation of 73 kilometers of 20-inch pipeline connecting the Horizon Project to the AOSPL terminal. Commissioning is scheduled for mid-2008 and the pipeline will be available for service on July 1, 2008.
The total cost of the Horizon Pipeline is estimated at $338 million. Pembina has worked closely with its customer in the development of this project and has employed a proactive contracting and procurement strategy to achieve a high degree of cost and scheduling certainty. Pembina has secured contracts for all major elements of the project and has acquired the pipe required to complete all three construction phases. Glen Fyfe, Pembina's Horizon Pipeline Project Manager, commented, "Pembina has effectively mitigated many of the challenges associated with managing a project in a heated industry environment by successfully executing its proactive contracting, procurement and expediting strategy. We expect to complete this project on time and on budget. The recent $165 million expansion of our AOSPL system, which was completed below initial cost estimates and ahead of schedule, gives us further confidence in our ability to deliver for our customers."
Canadian Natural will have exclusive use of the Horizon Pipeline and Pembina has agreed to the commercial terms required to construct expansions or extensions to the pipeline. The contracted revenue requirement includes provision for a fixed rate of return on invested capital and full recovery of operating costs, and is expected to provide roughly ten percent accretion to Pembina's current level of distributed cash flow making this a very attractive undertaking for both Pembina and its owners. Further, by leveraging its existing oil sands infrastructure to provide this new service, Pembina is able to offer Canadian Natural dedicated pipeline transportation service at a competitive rate.
The Horizon Pipeline represents an important step forward in Pembina's overall corporate strategy, establishing Pembina's presence in the oil sands infrastructure sector with 640,000 barrels per day of synthetic crude oil transportation capacity from the region and positioning the company for further growth in this key development area. Bob Michaleski, Pembina's President and CEO, stated, "the Horizon Pipeline reflects the future for Pembina. In addition to tremendous growth in our conventional and midstream business units, our oil sands unit continues to flourish and, with abundant future development opportunities associated with the ongoing rapid development of this important resource, we expect the cash flow contribution from this business unit to continue to expand."
Pembina Pipeline Income Fund (TSX: PIF.UN, PIF.DB.A, PIF.DB.B) is among the leading issuers in the Canadian energy infrastructure trust sector. Pembina's extensive network of conventional liquids feeder pipelines, and growing presence in the oil sands and midstream sectors, provide an integral service to the western Canadian energy industry. This balanced portfolio of premium, long-life energy infrastructure assets supports the stability and sustainability of the Fund. Information on the Pembina Pipeline Income Fund is available on the Company's website at www.pembina.com.
Forward-Looking Information and Statements
This document contains certain forward-looking statements and information that are based on the Fund's current expectations, estimates, projections and assumptions in light of its experience and its perception of historical trends. In some cases, forward-looking statements and information can be identified by terminology such as "may", "will", "should", "expects", "projects", "plans", "proposed", "anticipates", "targets", "believes", "estimates", "continue", " designed", "objective", "potential" and similar expressions. In particular, this document contains forward-looking statements and information with respect to: future expansion, development, growth and performance of the Fund's business and asset base; future demand for oil sands transportation services; and future levels of oil and natural gas development. These statements are not guarantees of future performance and are subject to a number of known and unknown risks and uncertainties, including but not limited to: the impact of competitive entities and pricing; reliance on key industry partners, alliances and agreements; the strength and operations of the oil and natural gas production industry and related commodity prices; regulatory environment; construction delays; labour and material shortages; and certain other risks detailed from time to time in the Fund's public disclosure documents. The Fund believes the expectations and material factors and assumptions reflected in these forward-looking statements and information are reasonable as of the date hereof and based on the current business and operations of the Fund and its customers and industry partners and the current industry conditions, but no assurance can be given that these expectations, factors and assumptions will prove to be correct. Undue reliance should not be placed on these forward-looking statements and information as both known and unknown risks and uncertainties, including those business risks stated above, may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements and information. Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from those predicted, forecast or projected. Such forward-looking statements and information are expressly qualified by the above statements. The Fund does not undertake any obligation to publicly update or revise any forward-looking statements or information contained herein, except as required by applicable laws.
SOURCE: Pembina Pipeline Income Fund
Ms. Glenys Hermanutz, Vice President, Corporate Affairs, Pembina Pipeline Corporation, (403) 231-7500, 1-888-428-3222 e-mail: [email protected]