Pembina says proposed West Coast pipeline stake fits its broader strategy

Pembina Pipeline Corp. is strategically positioning itself to participate in a proposed West Coast oil pipeline, planning to acquire a 10% interest during its construction phase. The company also holds an option for an additional 10% stake once the project becomes operational.

Scott Burrows, Pembina's CEO, highlighted the project's alignment with the company's strategy, emphasizing its role in connecting energy resources and enhancing netbacks for customers. "Anything we can do in the basin, whether it’s natural gas, (liquefied petroleum gas), crude oil, to increase the production and the netback for our customers has that knock-on effect throughout the business," Burrows stated during the company's second-quarter earnings call.

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When I think about the strategy, this fits clearly in the connect bucket. Anything we can do in the basin, whether it’s natural gas, (liquefied petroleum gas), crude oil, to increase the production and the netback for our customers has that knock-on effect throughout the business.

Pembina has full discretion over its final investment decision and has secured protections against cost overruns and for returns. Burrows expressed excitement about the project's potential benefits not only for Pembina but also for the broader energy basin. The pipeline, to be developed by Crown-owned Trans Mountain Corp., is estimated to cost between $35 billion and $44 billion, with significant funding from federal and provincial governments.

This pipeline aims to increase Canada's oil exports by 20%, potentially more than doubling shipments overseas. Pembina also reported progress on its Cedar LNG project in Kitimat, British Columbia, anticipating first exports in late 2028. The company announced a second-quarter profit of $512 million, up from $417 million a year earlier, with revenue reaching $2.15 billion.

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We’re willing to put some money at risk, but it comes back to the risk-reward, and when we stacked up all the key aspects of this project, we felt like it was something that we wanted to be involved in and are very excited about it, not just for Pembina but what it can do for the basin as well.