CALGARY, Alberta — Pembina Pipeline Corporation (TSX: PPL; NYSE: PBA) announced today it has entered into a non-binding Heads of Agreement (HOA) to participate in a significant nation-building energy infrastructure initiative. This multi-stakeholder project, involving the Government of Canada, the Province of Alberta, Trans Mountain Corporation, and the Alberta Petroleum and Marketing Commission, is designed to strengthen Canada’s energy transportation network and expand global market access for Canadian crude oil.
A National Infrastructure Endeavor
The proposed initiative contemplates the development of a new crude oil pipeline system with an approximate capacity of one million barrels per day, connecting Alberta to Canada’s West Coast, alongside a related export terminal. This ambitious undertaking, referred to as “the Project,” is positioned as a national priority. It will leverage the existing Trans Mountain pipeline right of way, also known as the southern route, to facilitate its development.
The Project framework outlined in the HOA establishes a development company that will be jointly owned by the Government of Canada, the Province of Alberta, and Pembina. Furthermore, a working interest is reserved for Indigenous partners, which they will have the opportunity to acquire once the Project achieves commercial operations. This structure underscores a collaborative approach involving governmental, industry, and Indigenous stakeholders in a first-of-its-kind initiative for Canada.
Pembina’s Defined Role and Economic Interest
Pembina’s involvement is specifically tailored to contribute its extensive development and execution expertise to this complex undertaking. The company, with over 70 years of experience in safe, disciplined, and cost-effective project development, will provide an independent perspective on cost, schedule, and execution, complementing the lead Project proponent, Trans Mountain Corporation. Trans Mountain Corporation is slated to oversee the Project’s construction, regulatory processes, stakeholder and Indigenous engagement, and subsequent operation of the asset.
Under the terms of the HOA, Pembina’s economic interest during the construction phase will be 10 percent, with the potential to increase by an additional 10 percent once the Project enters commercial operation. As part of its initial engagement, Pembina is currently reviewing the development plans and initial capital cost estimates for the Project. This due diligence process is expected to continue until the signing of definitive agreements, which are targeted for September 2026.
Disciplined Investment and Risk Mitigation
Consistent with its long-standing capital allocation strategy, Pembina is evaluating its participation through a disciplined and rigorous investment framework. The multi-stakeholder structure is intentionally designed to appropriately align risk and responsibility among all participants. Crucially, the HOA includes specific protections for Pembina concerning potential cost overruns and ensuring adequate returns on investment.
Pembina maintains full discretion over any final investment decision (FID) for its interest and will not incur any at-risk development capital prior to making that FID. The company plans to assess the opportunity against defined Project milestones throughout the development period, ensuring its participation remains consistent with its prudent capital allocation guardrails and its broader development portfolio. Updates on the Project’s evaluation will be provided at appropriate milestones.
Scott Burrows, President and Chief Executive Officer of Pembina, emphasized the strategic importance of the initiative. “The Project represents a once-in-a-generation opportunity to advance nation-building energy infrastructure that strengthens Canada’s economy and expands access to global markets for Canadian energy,” said Burrows. He added, “We are proud to bring our development and execution expertise to a project of this national significance. Our participation will be evaluated through the same disciplined lens we apply to every capital decision. We have approached our involvement in a way that is measured, that preserves our financial flexibility, and that incorporates meaningful protections — so that any participation remains consistent with our financial guardrails and creates durable value for our shareholders.”
Pembina’s measured approach, coupled with the collaborative framework involving federal and provincial governments and Indigenous partners, signals a significant step towards enhancing Canada’s energy export capabilities while managing financial exposure for its shareholders. The coming months will see continued due diligence and stakeholder engagement as the Project moves towards definitive agreements, aiming to unlock new global markets for Canadian energy resources.
