News Release

Pembina Pipeline Corporation to Invest Capital of $470 Million in 2011

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

CALGARY, March 9 /CNW/ - Pembina Pipeline Corporation  (TSX: PPL), (TSX: PPL.DB.C) ("Pembina") today announced its planned capital spend for 2011 of approximately $470 million, with the majority targeted at projects expected to provide new sources of cash flow by mid-year. 

"Our growth strategy is on track," said Bob Michaleski, President and Chief Executive Officer. "We expect the bulk of our 2011 investments to begin generating returns as we take some of our key expansion projects to the commissioning stage during the first half of the year."

Approximately $215 million, nearly half of Pembina's 2011 capital budget, is allocated to completing construction of the Nipisi and Mitsue Pipeline projects. The two pipelines, which will provide diluent supply and heavy oil take-away capacity for the region north of the Town of Slave Lake, Alberta, are on target for start-up mid-2011. Based on certain assumptions, Pembina's internal projections estimate the two pipelines, which are expected to cost approximately $440 million when complete, will generate approximately $45 million per year in net operating income once fully operational (see "Forward-Looking Statements & Information").

Other projects Pembina plans to complete in 2011 include the construction of a new facility to extract up to 14,400 barrels per day ("bpd") of additional natural gas liquids from its Cutbank Complex gas gathering and processing facility, and, subject to regulatory approval, the Willesden Green project, which is expected to add 25,000 bpd of throughput capacity to its Drayton Valley pipeline system.

Pembina plans to finance its 2011 capital expenditures through undrawn credit facilities and cash flow from operating activities.

Pembina's 2011 capital spending plan reflects strong growth opportunities that expand on existing operations in each of its businesses and supports its plan to maintain current dividends of $1.56 per share per year to investors through 2013 (see "Forward-Looking Statements & Information").

2011 Capital Spending Breakdown

Pembina's 2011 capital spending plan is expected to be allocated as follows:

  • The Conventional Pipelines business expects to invest approximately $90 million in 2011, with the majority allocated to Alberta-based pipeline systems including the Willesden Green project. This will allow Pembina to strengthen its transportation service offering to producers in the Cardium oil formation . Investments to enhance system-wide operational reliability and integrity are also being made to support the expected increase in pipeline throughput across many of Pembina's systems.¬†
  • The Oil Sands & Heavy Oil business' capital spending plan for 2011 is approximately $220 million. This includes a $215 million investment to complete the Nipisi and Mitsue Pipeline projects, with the remainder being targeted at oil sands pipeline system upgrades.

  • Midstream & Marketing intends to invest $65 million in 2011, excluding the recently announced acquisition of terminalling and storage facilities in the Edmonton, Alberta area which closed on January 7, 2011. A majority of this spending reflects linefill purchases for the Peace Pipeline system (which became a single shipper pipeline system for crude and condensate volumes in January 2011) and for the Nipisi and Mitsue Pipelines (Pembina Midstream Limited Partnership, a wholly-owned subsidiary of Pembina, has contracted capacity on the Nipisi and Mitsue Pipelines). The remainder is expected to be used to increase the connectivity of Pembina's Midstream & Marketing assets, including the Pembina Nexus Terminal, and upgrade existing truck and storage terminals.

  • Pembina's Gas Services business plans to spend approxmately $75 million in capital in 2011 to enhance natural gas liquids extraction as well as gathering and processing capabilities at the company's Cutbank Complex.

  • The remainder of Pembina's 2011 capital budget will be used to complete a variety of corporate-wide projects, primarily allowing for system and technology upgrades.

The 2011 program outlined above does not include any capital for acquisitions.

Pembina's capital expenditures totaled approximately $200 million in 2010.

Pembina Pipeline Corporation transports crude oil and natural gas liquids produced in western Canada, owns and operates oil sands pipelines, and has a growing presence in the midstream and marketing and gas services sectors. Pembina's common shares and convertible debentures are traded on the TSX under the symbols PPL and PPL.DB.C respectively.

Forward-Looking Statements & Information

This document contains certain forward-looking statements and information that are based on Pembina'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 "plans", "targets", "expects", "projects", "will", "estimates", "intends", "generates" and similar expressions suggesting future events or future performance.

In particular, this document contains forward-looking statements and information, including certain financial outlook, pertaining to, without limitation, the following: Pembina's corporate strategy; the ability of Pembina to maintain its current level of dividends to shareholders through 2013 ; the construction schedule and commissioning of the Nipisi and Mitsue pipelines, the Willesden Green project, and the Cutbank Complex enhanced natural gas liquids ("NGL") extraction facility; the ongoing utilization and expansions of and additions to Pembina's business and asset base, growth and growth potential; expectations regarding future demand for oil sands transportation services; expectations regarding supply and demand factors and pricing for oil and natural gas; potential revenue and cash flow enhancement; and future cash flows, maintenance and operating margins. These forward-looking statements and information are being made by Pembina based on certain assumptions that Pembina has made in respect thereof as at the date of this document including those discussed below.

With respect to forward-looking statements and information contained in this document, Pembina has made assumptions regarding, among other things: ongoing utilization and future expansion, development, growth and performance of Pembina's business and asset base; future demand for oil sands transportation services; future levels of oil and natural gas development in proximity to Pembina's pipelines and other assets (which could be affected by, among other things, possible changes to applicable royalty and tax regimes); the amount of future liabilities related to environmental incidents; the availability of coverage under Pembina's insurance policies (including in respect of Pembina's business interruption insurance policy); future acquisitions, growth and growth potential in Pembina's Conventional Pipelines, Oil Sands & Heavy Oil, Midstream & Marketing and Gas Services' operations; potential revenue and cash flow enhancement; future cash flows; maintenance of operating margins; additional throughput potential on additional connections and other initiatives on the Conventional Pipelines systems; expected project start-up and construction dates; future dividends and taxation of dividends; future financing capability and sources; and negative credit rating adjustments.

Although Pembina believes the expectations and material factors and assumptions reflected in these forward-looking statements and information are reasonable as of the date hereof, there can be no assurance that these expectations, factors and assumptions will prove to be correct. Readers are cautioned that events or circumstances could cause results to differ materially from those predicted, forecasted or projected. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur, which 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.

None of the forward-looking statements described above are 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; the continuation or completion of third- party projects; regulatory environment and inability to obtain required regulatory approvals; tax laws and treatment; fluctuations in operating results; lower than anticipated results of operations and accretion from Pembina's business initiatives; reduced amounts of cash available for dividends to shareholders; the ability of Pembina to raise sufficient capital (or to raise capital on favourable terms) to complete future projects and satisfy future commitments, including the construction of the Nipisi and Mitsue Pipelines and related facilities, the Cutbank Complex enhanced NGL extraction facility, and the Willesden Green project; construction costs of the Nipisi and Mitsue Pipelines and related facilities, the Cutbank Complex enhanced NGL facility, and the Willesden Green project; construction delays; labour and material shortages; and certain other risks detailed from time to time in Pembina's public disclosure documents available at Readers are cautioned that this list of risk factors should not be construed as exhaustive.

The forward-looking statements and information contained in this document speak only as of the date of this document. Pembina does not undertake any obligation to publicly update or revise any forward-looking statements or information contained herein, except as required by applicable laws. The forward-looking statements and information contained in this document are expressly qualified by this cautionary statement.