Q4 2024 Pembina Pipeline Corp Earnings Call
Speaker Change: Good morning, ladies and gentlemen, and welcome to the Pembina Pipeline Corporation's 4th Quarter 2024 Results Conference Call.
Speaker Change: At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session.
Speaker Change: If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on February 28th, 2025. I would now like to turn the conference over to Dan Tucunel, VP of Capital Markets. Please go ahead.
Thank you Constantine
Speaker Change: Good morning, everyone. Welcome to Pemina's conference call and webcast to review highlights from the fourth quarter of 2024. On the call today, we have Scott Burrows, President and Chief Executive Officer, and Cameron Goldade, Senior Vice President and Chief Financial Officer, along with other members of Pemina's leadership team, including Jared Sprout, Janet Leduca, Stu Taylor, Ava Bishop, and Chris Sherman.
Speaker Change: I would like to remind you that some of the comments made today may be forward-looking in nature and are based on Pevena's current expectations, estimates, judgments, and projections.
Speaker Change: Forward-looking statements we may express or imply today are subject to risks and uncertainties which could cause actual results to differ materially from expectations.
Further, some of the information provided refers to non-GAAP measures.
Speaker Change: To learn more about these forward-looking statements and non-GAAP measures, please see the company's management discussion and analysis.
Scott Burrows: dated February 27, 2025, for the period ended December 31, 2024, as well as the press release Pemina issued yesterday, which are all available online at pemina.com and on both CedarPlus and EDGAR. I will now turn things over to Scott.
Thanks, Dan.
Scott Burrows: We were pleased yesterday to report our fourth quarter results, which included quarterly earnings of $572 million, record quarterly adjusted EBITDA of $1.254 billion, and record quarterly adjusted cash flow from operating activities of $922 million, or $1.59 per share.
Scott Burrows: We also delivered 2024 full-year earnings of $1.874 billion, record annual adjusted EBITDA of $4.408 billion, and record full-year adjusted cash flow from operating activities of $3.265 billion.
million dollars or $5.70 per share.
Scott Burrows: A record financial year reflects the positive impact of recent acquisitions, growing volumes in Western Canadian Sedimentary Basin, and a strong contribution from the marketing business.
Scott Burrows: 2024 was marked by several accomplishments that highlighted the successful execution of Pemina's strategy and our focus on strengthening our existing franchise, increasing our exposure to lighter hydrocarbons and resilient end-use markets, and accessing global market pricing for Canadian energy products.
Scott Burrows: Highlights included growing our presence in resilient Northeast U.S. natural gas and NGL markets by fully consolidating ownership of Alliance and AuxSable, furthering global market access for Canadian natural gas producers by reaching a positive FID on the Cedar LNG project,
Scott Burrows: Adding capital efficient, timely, and certain capacity to accommodating growing Western Canadian sedimentary basin production through completion of the Phase VIII Peace Pipeline expansion.
Scott Burrows: Supporting growth-focused Montney and DuVernay area customers with tailored solutions through two PGI transactions that included an expected $700 million growth to PGI funding for further infrastructure development that will be underpinned by long-term contracts.
Scott Burrows: capitalizing on long-term stable demand for ethane from Alberta's growing petrochemical industry by entering a 50,000 barrel per day ethane supply agreement with Dow.
Scott Burrows: We also continued commercial successes across the business in 2024, including executing incremental contracts or renewing contracts for approximately 170,000 BOE per day of pipeline transportation, primarily on Alliance and Peace Pipeline, as well as 25,000 barrels per day on the Nipissi Pipeline.
Scott Burrows: Over 6 million barrels of storage at the Edmonton terminals, approximately 200 million cubic feet per day of gas processing, primarily at Musro, Patterson, Pookin Creek, and K3, and additional fractionation services across the Redwater complex.
Scott Burrows: On the major project front, we continue to progress various in-flight construction projects expected to enter service in 2026, including the RFS-4 expansion, the Wapiti plant expansion, and the K-3 cogeneration facility. We are also looking forward to the start of construction of Cedar LNG's floating vessel in mid-2025.
Scott Burrows: Further, we are continuing to progress infrastructure solutions to meet PEMENA's commitment under the 50,000 barrel per day ethane supply agreement with Dow.
Scott Burrows: Kamin is seeking to fulfill his commitment in the most capital efficient manner possible and is evaluating a portfolio of opportunities including the addition of a de-ethanizer tower at RFS 3 within the Redwater complex.
Scott Burrows: By leveraging its existing assets and capabilities, Pemina now expects the total capital investment required to be less than $300 million, below the low end of the range previously communicated, resulting in improved capital efficiency as there is no change in the forecasted adjusted EBITDA contribution associated with the Dow Supply Agreement.
Scott Burrows: And we are actively developing additional expansion opportunities to support growing demand for services on our conventional pipelines.
Scott Burrows: phase of the Canada Energy Regulators process, an expansion of the Peace Pipeline system to add up to approximately 200,000 barrels per day of capacity to its market delivery pipeline from Fox Creek to the Mayo, and additional expansions to support volume growth in Northeast BC.
Scott Burrows: Finally, we were excited to announce yesterday two new business updates.
Scott Burrows: The first was that Pemina has entered into agreements for a 50% interest in the Greenlight Electricity Centre Limited Partnership, which is developing a gas-fired combined cycle power generation facility to be located in Alberta's industrial heartland on land owned by Pemina, adjacent to its Redwater complex.
Scott Burrows: The Greenlight Electricity Center has been, and will continue to be, developed by Kinetic Core Asset Management.
Scott Burrows: Greenlight is in active discussions with data center customers to commercially underpin the project and believe the lands within the Alberta industrial heartland are well suited given their proximity to transmission and utility infrastructure.
along with our direct investment in Greenlight.
The second announcement was that Pembina has secured the sole extraction rates from the yellow had mainline 1 billion cubic feet per day natural gas delivery pipeline that is under construction by Atco Pembina is currently advancing engineering of an up to 500 million cubic feet per day straddle facility at which up to 200 or sorry, 25000 barrels per day a N G.
Scott Burrows: Ill mix would be extracted from the natural gas stream.
Scott Burrows: Transported to Fort Saskatchewan, Alberta for fractionation and sale the straddle facility would be located on Perm in his own land and complement to our already significant experience building and operating liquids extraction facilities that include approximately $1 8 billion cubic feet per day of extraction capacity through our Empress and younger facilities.
Scott Burrows: The many successes of 2024 and followed by continued momentum into into early 2025, together they reflect permanent leading position in the heart of the WCS b and the many opportunities available to enhance and expand our service.
Scott Burrows: Alongside of growing Canadian energy industry, I will now turn things over to Kam to discuss in more detail the financial highlights for the fourth quarter and full year.
Kam: Thanks, Scott as Scott noted permanent reported record fourth quarter adjusted EBITDA of one point to five 4 billion.
Kam: This represents a 21% increase over the same period in the prior year.
In pipelines factors impacting the quarter, primarily included a higher contribution from alliance due to increased ownership. Following the alliance are stable acquisition and higher demand for seasonal contracts higher revenue related to the timing of capital recovery recognition higher volumes on the <unk> pipeline higher contracted volumes on the.
Kam: Peace pipeline system, and contractual and placement adjustments on tours, which were largely offset by earlier recognition of take or pay deferred revenue. During the first half of 2024, and finally lower net revenue on the Cochin pipeline largely due to lower from tools and lower interruptible volumes during the period.
Kam: In facilities factors impacting the quarter included the inclusion of Ark Sable following the Ark Sable Alliance acquisition.
Kam: And a higher contribution from pgi due to higher revenue associated with oil batteries acquired in the fourth quarter of 2024, as well as higher volumes at certain pgi assets and the timing of capital recovery recognition.
Kam: In marketing and new ventures fourth quarter results reflect the net impact of higher net revenue from contracts with customers due to increased ownership interest in the Ark Sable higher NGL margins and lower realized gains on commodity related derivatives.
Kam: Finally in the corporate segment fourth quarter results were higher than the prior period due to lower incentive costs.
Kam: Earnings in the fourth quarter were $572 million. This represents an 18% decrease over the same period in the prior year.
Kam: In addition to the factors impacting adjusted EBITDA. The decrease in earnings in the fourth quarter was primarily due to the net impact of the reversal of the previous impairment related to the <unk> pipeline, which impacted the fourth quarter of 2023.
Kam: Unrealized gains recognized by Pgi on interest rate derivative financial instruments compared to unrealized losses in 2023.
Kam: Unrealized losses on commodity related derivatives compared to unrealized gains in the prior period.
Kam: Unrealized gains on interest rate derivative financial instrument instruments recognized by Cedar LNG and higher interest expense and higher income tax expense.
Kam: Total volumes were 367 million barrels per day in the fourth quarter. This represents an increase of 6% over the same period in the prior year, reflecting the net impact of the alliance of stable acquisition, the reactivation of <unk> pipeline.
Kam: Lower volumes on the peace pipeline system due to earlier recognition of take or pay deferred revenue in the first half of 2024, which more than offset increased from higher contracted volumes.
Kam: And lower interruptible volumes on the Cochin pipeline.
Kam: The fourth quarter contributed to full.
Kam: Full year results.
Kam: That included earnings of $1 874 billion.
Kam: Record adjusted EBITDA of $4 4 billion.
Kam: Which was 15% higher than in 2023.
Kam: Cash flow from operating activities of three to one 4 billion.
Kam: And record adjusted cash flow from operating activities of three to six 5 billion.
Kam: Thanks to strong results in 2020 for Pembina generated meaningful free cash flow, which is allocated to strengthening the balance sheet and returning capital to shareholders by increasing the common share dividend by three 4%.
Kam: At December 31, 2024 based on the trailing 12 months the ratio of proportionally consolidated debt to adjusted EBITDA was three five times.
Kam: Notably this ratio reflects only three quarters of contribution from the increased ownership in alliance and aux Sable, but all of the debt associated with that transaction or.
Kam: Our leverage remains at the low end of our targeted range reflected strong balance sheet and supporting a strong triple B credit rating I will now turn things back to Scott.
Scott Burrows: Thanks Cam.
Scott Burrows: In closing I'll once again say how excited we are about the opportunities ahead. We believe <unk> is best positioned to benefit from the growth we are seeing and expect to continue to see in the WCS.
Scott Burrows: Our extensive network of strategically placed assets provides a full suite of midstream and transportation services across all commodities natural gas Ngls and condensate and crude oil and we are confident that our customer service offering provides unmatched optionality and flexibility that our customers value. We have an abundance of opportunities ahead of us and a clear pathway.
Scott Burrows: Growth with approximately $4 billion of secured projects currently under construction and more than $4 billion of additional projects in various stages of development. We are looking forward to the year ahead and continuing to share our progress with you.
Scott Burrows: For joining us this morning, and then can you. Please open up the line for questions.
Scott Burrows: Ladies and gentlemen, we will now begin the question and answer session.
Scott Burrows: So do you have a question. Please press star followed by the number one on your Touchtone phone, you'll hear a prompt that your hand has been raised should.
Scott Burrows: Should you wish to decline from the polling process. Please press star followed by the number too.
Scott Burrows: Yeah.
Scott Burrows: If you are using a speaker phone please make sure to lift your handset before pressing any keys.
Speaker Change: Your first question comes from the line of a J O'donnell from T. P. H. Your line is now open.
Speaker Change: Hey, good morning, everyone.
Speaker Change: I was just hoping to maybe start on the rights.
Speaker Change: The rights to the Ngls off the yellow had mainline project.
Speaker Change: Trying to think about what kind of commercial and growth opportunities.
Speaker Change: That might create for you.
Speaker Change: Trying to think of it maybe along the lines of additional frac capacity or export dock capacity.
Speaker Change: Yes, good morning, a J jaret here. Thanks for the question. So yeah like Scott mentioned in his opening remarks, we were awarded.
Speaker Change: Exclusive extraction rates on the yellow had mainline which will go into service kind of the latter half of 2027 based on public disclosure, we estimate we could build probably something in the neighborhood of maybe 500 million a day of extraction capacity, resulting in approximately 25000 barrels of NGL extraction. So what we're doing right now a J as we are.
Speaker Change: Evaluating our two supply portfolios of <unk>, one, which we've been fairly public with lately supporting dollars net to zero Cracker, just evaluating how would the <unk> fit into our overall portfolio. So.
Speaker Change: So that's ongoing and we expect to have a little bit more information on that probably at the May call. But then obviously so that's the two component of of the opportunity and then with the <unk> plus obviously.
Speaker Change: Actively building RFS for which is an incremental 55000 barrels of of <unk> or <unk> plus extraction capacity.
Speaker Change: Fractionation.
Speaker Change: This barrels we could just shifted across the river.
Speaker Change: And put that into our existing frac capacity, if we're not fully contracted and that would be very complementary to our marketing NGL book today, we have a large portfolio of C. III plus it would be very complementary to that and Chris and his team.
Speaker Change: They would continue to find the best market for those products either domestically into the United States <unk> internationally through West Coast exports Scott.
Speaker Change: Scott did mention through the acquisition of a box Sable and closing that here this summer.
Speaker Change: And when it does have a nice contiguous block of land right adjacent to.
Speaker Change: Dow's cracker and that will be determined as essentially of where we would put our extraction facility. We have access to the AG pipeline, that's the Alberta ethane gathering system right. There and then the red water fractionation complex, where we would most likely send our C. III plus from this is just across the river.
Speaker Change: And we have existing pipelines.
Speaker Change: Go back and forth between today, so we have operations in the area.
Speaker Change: We have actually between shana on younger and Empress we have well over three Bcf of this type of of operation. So we're well versed in how to build operate these types of assets.
Speaker Change: Great I appreciate also mentioned AJ.
AJ: Yes, sorry, Ajay as I can also mention that the alliance pipeline Scott mentioned the opportunity there is it.
AJ: In close proximity to Green light.
AJ: But also the alliance pipeline goes right through this this plot of land.
AJ: So there'll be further evaluation down the road about potentially if we ever wanted to do straddling that pipeline down the road. So that's an option as well.
AJ: Okay I appreciate the detail, but it kind of goes into my next question.
AJ: Just on Green light and just trying to think about the potential size of the gas requirement for the facility.
AJ: And how that could translate to additional capacity on alliance and then also just kind of along those lines.
AJ: If these projects kind of make it across the finish line and we see it.
AJ: Incremental capital invested into alliance.
AJ: Does that help mitigate at all the ongoing rate case situation with shippers I mean, I realize that theres, a timing mismatch here, but.
AJ: Is that being factored in your discussion with shippers currently.
Speaker Change: Hey, Jay Stu Taylor.
Speaker Change: With respect to the gas supply.
Speaker Change: One of the things that attracted us to this opportunity, but what we have right now as each phase we will consume approximately 80 million cubic feet per day of gas that will grow as you guys. The phases get built out obviously, that's that's a significant number.
Speaker Change: For gas egress for the province, as well I'll, let Jeff talk more.
Speaker Change: Yes, just on the alliance, so where we're at with respect to that file and talking a little bit about expansion. So we have essentially met all the CER obligations here in the month of February and then we have ongoing biweekly meetings with the large shipper group its about 40 plus individuals.
Speaker Change: And just working.
Speaker Change: Expeditiously to get a negotiated settlement here in 2025 and get that in front of me.
Speaker Change: In front of the regulator, but what I will say with respect to the expansion. There is there are some common themes that we continue to hear a J number one our shippers on alliance very much value the service that aligns provides.
Speaker Change: Very much like the endpoint getting their gas into Chicago, but also the high reliability availability and the cost structure of the pipeline.
Speaker Change: And part of the conversation has got too.
Speaker Change: Expansion opportunities. So there is high demand for expansion opportunities.
Speaker Change: From the shipper group and were just evaluating that right now would that be a short haul.
Speaker Change: Expansion opportunity into the Fort Saskatchewan area is industrial mounting demand increases or is that a long haul type expansion, where we go all the way down.
Speaker Change: Down to the Chicago land area. If you recall alliance was originally set up to do what.
Speaker Change: What we call the beside compressors, so building out the beside compressors, where airlines already owns that land today.
Speaker Change: That would be the long haul and then we could do a shorter haul version just into the Fort Saskatchewan area. So it is an active conversation, we're having with the shippers.
Speaker Change: Okay.
Speaker Change: I appreciate all the detail. Thank you I'll turn it back.
Your next question comes from the line of Sarah You said Chen from Barclays. Your line is now open.
Sarah You: Good morning, and thank you for taking my questions.
Speaker Change: We're later that too.
Speaker Change: The Ngls, often think yellow head mainline and the potential of 500 Mcf per day straddle a facility can.
Speaker Change: Can you talk about how what kind of capital requirement.
Speaker Change: Good entail and as it translates to potentially 25000 barrels per day of NGL.
Speaker Change: Significant situ component.
Speaker Change: How much of the 25000 could <unk> supplement you're adding 50000 barrels per day supply.
Speaker Change: And then between that the $300 million to $300 million do you have a nice all right how much of it to <unk> to close two pieces comprise and would just love to get more details of the <unk>.
Speaker Change: Quantitative makeup at the 50000 barrels per day set.
Speaker Change: Okay.
Speaker Change: I'm going to try to unpack those in order. So I think the first question was with respect to cost.
Speaker Change: An asset of this size, we believe would be in that neighborhood of $4 million to $500 million now this is fairly preliminary.
Speaker Change: We're obviously going to be doing a significant amount of more work with respect to the engineering and as we progress through our gating system here at Pembina, but thats the rough order of magnitude.
Speaker Change: With respect to the composition of that 25000, you would expect to be roughly call. It 50% of that would be ethane the remainder would be your <unk> plus component.
Speaker Change: And then how does it fit into our overall portfolio. So that's what we're talking about right. Now is we have our existing supply agreements. There is also demand for future expansions with risk.
Speaker Change: In Alberta.
Speaker Change: <unk> has been very public about.
Speaker Change: Phase III et cetera. So we're just evaluating right now do we.
Speaker Change: Put these barrels into part of our existing supply portfolio or do we make this part of the incremental you mentioned RFS III optimizer, we've been fairly public about that.
Speaker Change: There is an opportunity there too we have existing barrels in our portfolio that we can add to the incremental demand there is new opportunities such as the RFS III and then there's these barrels so it's a little bit too early and premature to be talking about the actual details, but expect to provide a lot more color at our may.
Speaker Change: May conference call.
Speaker Change: Understood.
Speaker Change: And maybe turning to the LNG front, given the geopolitical developments.
Speaker Change: Europe.
Speaker Change: Russia, and Ukraine as well as the policy limits in the U S. Can you talk about your progress to date.
Speaker Change: Contracting the capacity you have remaining on SEDAR.
Steve: Hi, it's Steve again.
Speaker Change: We've been we've been working hard since late 2024.
Steve: Working with.
Steve: Potential acquirers of this capacity.
Steve: We're very pleased with the response that we've.
Steve: Had we have a broad range of customers, who are looking for LNG service.
Steve: Including both Canadian producers as well as NOC and IOC counterparts looking to participate we've had.
Steve: We've had term sheets out and term sheets returned.
Steve: Well in excess of the capacity that we have and so we're working through that process. We will soon be looking to short list.
Steve: And begin more detailed negotiations with these counterparts and we're very excited about where we sit at this point in time.
Steve: Thank you.
Speaker Change: Your next question comes from the line of <unk> Satish from Wells Fargo. Your line is open.
Steve: Thanks.
Speaker Change: Maybe I'll just start with two questions here on the on the Greenlight project. So first is just trying to understand how much.
Steve: Your share of Capex.
Steve: We just kind of assume $2000 per kilowatt and then your share could be as high as $1 8 billion and I know, it's going to happen in phases, but I just want to understand if thats in the range of how you see your investment into the project and enter timeframe for spending.
Steve: Okay.
Steve: Yes, so we're essentially 50% of the project at this point in time early days.
Steve: But we're looking at essentially one 5 billion per phase of 450 megawatts. So up to 800 megawatts. So our share would be again, 50% on a go forward basis.
Steve: Our plan.
Steve: He will be a phased development there could be opportunity as we stage. So we could accelerate some of the phases and combine them, but at this point at this point in time, it's a phased development of the four phases with construction.
Steve: Beginning we're targeting sometime in 'twenty six and then construction through 2000 32029 2030.
Steve: And maybe ill just chime in its cam here and just as a reminder to all the listeners.
Steve: Where we stand today.
Steve: Following the alliance and our <unk> acquisition, our run rate of free cash flow after dividends available for investment is in the range of about $1 billion in a quarter to about $1 billion per year.
Steve: We've obviously said that through 2025 and 2026th as we're closing out.
Steve: Some of the in flight projects and.
Steve: The heaviest spend period on Cedar.
Steve: Running at <unk>.
Steve: Lee.
Steve: Little above above a little excess free cash flow, but obviously closer to it and then 2027 and beyond we begin generating material free cash flow again available for all that investments so that obviously lines up really well with the opportunities that we're talking about here.
Steve: Got it that's helpful.
Steve: And then maybe just on the project itself Green light can you help us understand.
Steve: What the return profile looks like relative to your traditional midstream investments.
Steve: This is a bit of a step out in terms of taking a piece of the power generation parts or would you expect higher returns than your traditional hurdle rates and then can you say, whether the economics would be secured by long term contracts or would you be taking on any merchant exposure.
puneet: Hey, Puneet.
puneet: Let me start with I think it was your second question, there and I think one of the things that we really want to make sure is very clear is that obviously the <unk>.
puneet: Power generation angle of this opportunity is a great project in its own right, but what really makes us excited about it.
puneet: As it relates to permanent value chain is the integration potential so the opportunity obviously, we have a significant gas business today through our gas processing business through alliance.
puneet: Obviously, we we have an aspiring carbon carbon sequestration solution.
puneet: So the integration of the opportunity with those projects is what really got us excited about it.
puneet: To your specific questions, we would see.
puneet: We would see sort of base returns consistent with our midstream infrastructure return at this point, probably a little early to start throwing out exact multiples, but I would say, it's within that range and.
puneet: Lastly, I think it is of course, our intention to have a long term contract underpinning This project and obviously that's that.
puneet: Those negotiations are ongoing.
puneet: Got it thank you.
Speaker Change: Your next question is from the line of Rob Hope from Scotiabank. Your line is now open.
Rob Hope: Good morning, everyone.
Speaker Change: Maybe going back to alliance can you add some color on kind of what the initial consultations have been with shippers as well as.
Speaker Change: Is the expectation that the existing contracts could get reopened or is this really just focused on it.
Speaker Change: And the spot tools.
Jaret: Yeah, Rob Thanks, It's jaret here.
Jaret: So I would categorize the the group into just a few buckets right. So I mentioned Theres, obviously 40 plus.
Jaret: Folks in the room, you have long term shippers you have people, who you play in the seasonal strip in the <unk>.
Jaret: Component and then some really large long term shippers and then you have some of our smaller shippers on the pipeline. So those are kind of the three groups that we're working with right now.
Jaret: Can't get into too much detail with respect to.
Jaret: What everyone wants, but we are trying to hone into <unk>.
Jaret: Mutual agreement that meets the needs of all all 40 plus individuals.
Jaret: Can say, it's going very well and the conversations have been extremely respectful and progressive.
Jaret: As we continue to work with respect to the contracts that is actually what what.
Jaret: Some of the conversations are around depending on which route we go.
Jaret: There could be different outcomes and obviously.
Jaret: People that have a lot of capacity on the pipeline.
Jaret: Keep that capacity because obviously it supports here youre condensate development plans and those types of things long term.
Jaret: Theres, obviously people, who maybe don't have a lot of capacity on the asset who would love to have more capacity on the assets. So thats something that were working through but at the end of the day.
Jaret: The takeaway is it is a little bit early I think in May we'll be able to give you a little bit more color demand is high for the asset.
Jaret: And we just got to kind of quote unquote grind through it here for the next couple of weeks.
Ken Scott: Anything else, Ken Scott you want to add on that.
Jaret: No.
Jaret: Alright.
Jaret: I appreciate that and then maybe just going back to the ethane capital intensity commentary about being below the $300 million range, but maintaining the EBITDA profile there.
Jaret: Can you maybe add a little bit more color on kind of where youre seeing the savings or kind of where youre leaning too in terms of the option or optionality EMEA and solution.
Jaret: It's not so much savings Rob it's just really like we had a we had a portfolio of projects that could add too to the totality of our our supply book and it's really we just got really diligent and just going through those and evaluating each one on a standalone basis.
Jaret: Where did we have extra capacity across our enterprise, where we could.
Jaret: Maximize the ethane recoveries through existing assets, so that plays a portfolio or sorry, a portion of the portfolio. So really just getting militant in grinding it down and ultimately it's kind of we've been signaling its kind of honing in to that red water three <unk> tower, which is the most capital efficient red water three was.
Jaret: Built with a lot of the bells and whistles to accommodate that tower.
Jaret: So it was really just just doing the work.
Jaret: And working through our portfolio of opportunities and getting the maximum out of our existing.
Jaret: Steel that we have in the ground so through a combination of that the team did a tremendous job of coming up with.
Jaret: Being that low end of that capital range.
Jaret: And no yellow had obviously now we have to just take a step back and evaluate the entire portfolio with yellow head. Obviously comes a lot more <unk> plus so just working that into the mix, but like I said earlier, there is incremental demand for for incremental phases of.
Jaret: Polymer development here in Alberta.
Jaret: Great. Thank you.
Jaret: Thanks, Rob.
Speaker Change: Your next question comes from the line of Aaron Macneil from TD Cowen. Your line is now open.
Aaron MacNeil: Hey, good morning, all thanks for taking my questions.
Aaron MacNeil: How would you characterize the greenlight projects gas turbines slot reservations and other long lead time items.
Aaron MacNeil: More generally how far along is that sort of feed process.
Aaron MacNeil: Success do again, so we've been working with the <unk> development team for.
Aaron MacNeil: For over a year and a half.
Aaron MacNeil: They are at the beginning of our excitement with them is their expertise that they have and they just completed the cascade power plant in the edge scenario.
Aaron MacNeil: As well as they progress the ACO Q.
Aaron MacNeil: Position.
Aaron MacNeil: And again, that's what excites.
Aaron MacNeil: Our data center customers or the potential is the speed to market.
Aaron MacNeil: We are going to be in that turbine Q as.
Aaron MacNeil: As we go out we have not placed those orders at this point in time, but again, what I mentioned.
Aaron MacNeil: As expected in 2026 and our in service date in the 2030 timeframe timeframe. So.
We're happy where we are with the queue. We're happy with the progress we're engineering work to take place in 2025.
Aaron MacNeil: And reaching that FID decision in 2026.
Speaker Change: Got you and then maybe just to return to a J S question on increased NGL volumes flowing through the system can you comment specifically about that.
Aaron MacNeil: Capacity asked about in.
Aaron MacNeil: Helping your customers just export those incremental volumes more generally.
Aaron MacNeil: Thank you.
Chris Sherman: Aaron It's Chris Sherman.
Aaron MacNeil:
Aaron MacNeil: We're certainly paying a lot of attention to what volume growth in general looks like.
Aaron MacNeil: In the basin.
Aaron MacNeil: And that's a piece of it and undoubtedly continue to see the value of West coast export I think we've talked about some of the efficiencies we're driving in our own facility. We've talked about some of the other projects that are that are on the go on the west coast.
Aaron MacNeil: Each incremental barrel definitely supports supports those those export position so.
Aaron MacNeil: We're keeping an eye on them, we don't have anything specific link to or related to two yellow head per se.
Aaron MacNeil: But obviously, we're bullish west coast to export and like what we have there today and see that growth being supportive.
Aaron MacNeil: Of the projects that are underway.
Aaron MacNeil: It should be noted that these these C III plus barrels would be.
Aaron MacNeil: They will be proprietary payment of barrels they wouldnt be the barrels of the shippers on the yellow add pipeline.
Speaker Change: Got you.
Aaron MacNeil: I appreciate taking my questions I will turn it over.
Aaron MacNeil: Thank you.
Speaker Change: Your next question comes from the line of Manav Gupta from UBS. Your line is now open.
Manav Gupta: Good morning. Thank you for taking my question wanted to go to slide 15 executing type projects.
Speaker Change: A number of projects coming on in the first half off any 26 can you give us like some kind of progress plus India homa, whilst the completion at this point and general progress that Youre, making to getting these key projects all in plus type offering only six.
Speaker Change: Yes. Thanks for the question So project execution I'll speak to just the three largest ones. We have on the go here. So the <unk> co Gen.
Speaker Change: The wapiti expansion Wapiti gas plant expansion of Pgi, both those projects with Pgi projects.
Speaker Change: <unk> is executing and then our RFS for.
Speaker Change: Frac expansion and rail expansion so.
Speaker Change: All three of those projects are going extremely well and.
Speaker Change: No concerns with respect to timing <unk> execution.
Speaker Change: Got through each one of those projects through some pretty material milestones equip.
Speaker Change: Equipment is showing up active boots on the ground at all three of those locations. So no supply chain concerns and I would like to just have a bit of a shadow with respect to.
Speaker Change: Throughout the last couple of months Theres been some pretty extreme weather here in Alberta.
Speaker Change: Safety execution.
Speaker Change: Throughout the last couple of months and previous to that has been.
Speaker Change: Excellent that's been world class and impairment his opinion.
Speaker Change: The cost structure continues to come in as expected so.
Speaker Change: Like I said, we're getting through some pretty key milestones here in equipment's getting delivered to site and it's really it's really impressive to see these new assets coming out of the ground.
Speaker Change: Perfect. My quick follow up here is obviously, Dr. Laura produces what's your internal outlook for the this Canadian sedimentary basin volume growth, whether it's gas or liquids or oil like how should we think about the growth over the next two or three years based on your internal estimates.
Yes, it's Scott here.
Speaker Change: We use a lot of our own internal data and third party data and generally speaking they're lining up when we when we look at third party data, we're generally seeing growth in that kind of mid single digit.
Speaker Change: Area and I would say that that's relatively consistent with our own internal forecast I would say the only hesitation I have right. Now is just given all the volatility in the market and the uncertainty that puts a little bit of a cloud over it but absent that that mid single digit is something that we continue to forecast.
Speaker Change: Thank you so much.
Speaker Change: I would maybe just add to that.
Speaker Change: Although the average is mid single digits some of permanent biggest shippers if you go into their detailed public.
Speaker Change: Public information some of them are growing at higher than that and it should be noted that some of our customers are drilling into take or pay contracts.
Speaker Change: Some of them would be over so although the physical volumes will continue to grow.
Speaker Change: We believe that we're in a pretty good position to continue to meet their their growth demand.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Maurice Choy from RBC capital markets. Your line is now open.
Maurice Choy: Thanks, and good morning, everyone just wanted to come back to the discussion about returns on Green light.
Maurice Choy: You mentioned that the base returns will be consistent.
Maurice Choy: With your midstream assets, but I suppose if you look at your existing value chain.
Speaker Change: That can be a relatively wide range, depending on your exposure to volumes and prices for example.
Maurice Choy: So if I think about this.
Maurice Choy: Other returns more close to say this more traditional seven times.
Maurice Choy: Bill multiples that you have or are we talking about something close to nine or 10 times for our long term contracted take or pay infrastructure.
Maurice Choy: Yes Maurice.
Maurice Choy: <unk>.
Maurice Choy: Negotiations are ongoing so I'm, a little reticent to start to point to a specific data point.
Maurice Choy: I would just say, obviously I mean, you've obviously painted the range of of our return profile historically, and we would characterize it within that range, but given the stage of negotiations I'm reluctant to sort of specifically quantify it at this stage.
Maurice Choy: Okay.
Maurice Choy: Maybe just holistically.
Maurice Choy: Take a step back away from from Green I can look at an opportunity.
Maurice Choy: Opportunity like this yellow head and everything.
Maurice Choy: Where do you sense.
Maurice Choy: Sure.
Maurice Choy: The type of risk versus returns and.
Maurice Choy: Has anything change in loss.
Maurice Choy: 12 months in terms of.
Maurice Choy: How you view your next opportunity and how you view your return criteria.
Maurice Choy: I think what we what we look at is obviously.
Maurice Choy: A full scale value chain across the business.
Maurice Choy: And obviously.
Maurice Choy: Opportunities across that value chain, which continue to come.
Maurice Choy: I think part of it is obviously the commercial angle part of it is execution and control your cost and protecting that I think Jared Jared exemplified what we think is one of our advantages in that.
Maurice Choy: Our track record on capital execution, I think has been incredibly strong.
Maurice Choy: Historically, and so for us that gives us a lot of confidence.
Maurice Choy: To be able to.
Maurice Choy: Sort of.
Maurice Choy: I will put forward a compelling proposition to the customers in terms of the commerce.
Maurice Choy: Obviously, that's a market facing.
Maurice Choy: We have a history of trying to find creative solutions I think that shows up through a couple of the transactions that we did with pgi and white cap and varying over the course of this year I think it's shown up historically in our contracting and our pipelines business and so we continue to.
Maurice Choy: Look for opportunities to be creative ultimately the market drives what returns are but I think we control what we can control and when you look at sort of our capabilities and building assets specifically relative to competition that is one area, where we differentiate ourselves and where we believe we have a <unk>.
Speaker Change: Additive advantage.
Speaker Change: Thanks, and maybe just finishing off with more of a holistic sort.
Speaker Change: That is your question about.
Speaker Change: Using greenlight as an example here obviously, you mentioned that greenlight benefits from being close and proximity to alliance maybe.
Speaker Change: You may want to do with ACG.
Speaker Change: Does that mean that you can probably scoped out future power option in Q2.
Speaker Change: Once they are close to infrastructure versus.
Speaker Change: Being a more.
Speaker Change: IPP player within the province.
Speaker Change: 10% this.
Speaker Change: This is all about the data center play the value chain extension cited behind defence on our lands Youre not going to see us do an IPP and less bridge or something like that this is this is very focused and targeted and on strategy.
Speaker Change: Understood Thanks for that.
Speaker Change: Your next question comes from it comes from the line of Spiro <unk> from Citi. Your line is now open.
Speaker Change: Thanks, operator, good morning, everybody.
Speaker Change: I want to touch first on tariffs.
Speaker Change: As pointed out in the release no eminent impact its operations, but it does seem to have reinvigorated a broader discussion in Canada, just around energy infrastructure in new what best suits. Your needs. So curious if thats reshaping, how youre thinking about projects that youre pursuing longer term and if you're already maybe seeing that sort of shift.
Speaker Change: Where projects are coming in that maybe you weren't on the radar a few months ago.
Ken Scott: Yes, it's Scott here.
Ken Scott: As we pointed out as you said in the press release no no immediate financial.
Ken Scott: Impact from the tariffs.
Ken Scott: From our perspective.
We're hearing all the right things and now we need to start to see all the right things.
Ken Scott: And so from our perspective.
Ken Scott: We do see a sentiment change in terms of of politicians in terms of the general public which we think is generally positive for the industry. We've been progressing lots of projects in the background and we will continue to progress those projects.
Ken Scott: Hopefully with what's happening in the obvious.
Ken Scott: To the country that these projects need to get built and so we think that there is definitely positive tailwind you are not going to see anything in the next day or two obviously, but we continue to to see tailwind in terms of potentially.
Ken Scott: <unk>.
Ken Scott: Regulation deregulation.
Ken Scott: Speedier project approvals, which should benefit the industry long term.
Got it that's helpful color Scott.
Speaker Change: Second question, just a quick cleanup one related to Capex. The December guidance pointed to the potential for Capex, maybe increase as much as $200 million if more projects get sanctioned obviously, you've sort of announced a few last night and today. So just curious kind of where we sit with that $200 million number.
Kim: <unk> Kim here.
Kim: Some of them have progressed, along the way I'd say it might be but about half of that has progressed along I mean, one of the big pieces there was.
Kim: The <unk> at RFS, we're continuing to move through gates internally on that as well as some of the northeast BC.
Kim: Spending which continues to move through gates. So I would say that at this point, we're not all the way towards that upper end, we're marching marching through the range and if you want to pick a point probably about halfway.
Speaker Change: Got it that's helpful.
Kim: Okay, Thanks for that and I'll leave it there.
Next question is from the line of Jeremy Tonet from Jpmorgan. Please go ahead.
Jeremy Tonet: Hey, good morning, everyone.
Speaker Change: Jonathan on for Jeremy.
Speaker Change: Maybe just on the 2025 guide I mean, we saw a pretty strong print and <unk> and we recognized some seasonality in the business, but how should we think about the four 2% to four five range incorporating some conservatism.
Speaker Change: Is that tied to any cushion for alliance or can you just help frame that up a bit.
Eli: Yes, good morning, Eli.
Eli: I think the way we would characterize the ranges is a couple of things obviously, there is seasonality in our business and I think.
Eli: It comes from about three different places obviously, the first is obviously the inherent seasonality in the marketing business, which is weighted to Q1 and Q4, I think thats generally well understood.
Eli: With the advent of more west coast egress.
Eli: For the for the liquids business in the last sort of two to three years I mean, obviously that has moderated some but even you still see that in large extent on the pricing side and I think you'd see that this year as well.
Eli: Second thing would be obviously, the repair and integrity work portfolio that occurs in our business and so.
Eli: Often that results in in much of that occurring in in the third quarter. Some of our work occurs in the first and the fourth quarter because of winter access only but there is some seasonality in that just based on obviously getting through spring getting the work and planning our work plan and then the last piece would obviously be.
Eli: The alliance interruptible profile, so as we've seen in past years and continue to be our outlook. This year is is obviously.
Speaker Change: <unk> seasons tend to see higher interruptible demand.
Eli: Consequently, higher higher demand for service.
Eli: And that would be.
Eli: Lead to a relatively soft through Q2, and Q3 for that asset relative to Q1 and Q4.
Eli: In some cases, the seasonality has been in some years upwards of 15%.
Eli: Like from Q1 to Q2 type of sequential numbers. So I think we think about that and we see that I think the last point I would make with respect to the overall guidance for the year is as I want to remind everyone that we do our guidance and are forecasting.
Eli: <unk> on the forward strip as it relates to the direct commodity exposure part of our business and the marketing segment.
Eli: And if you look at that business today, obviously, we've had a very good January so far I mean, I think most of the pricing despite the tariff noise and volatility as shown up well, we see we saw belvieu propane and the 90 range. Obviously the dollar Canadian dollar has weakened and that's a net positive for our business.
Eli: <unk>.
Eli: But I think when you look at the curves for the balance of the year. I mean, if you were to look at a frac spread for example through the balance of the year.
Eli: There is a effectively a $10 difference between January and December Frac spreads. So theres, a fair amount of backwardation in the in the curves at the moment.
Eli: Obviously, if we continue to see each month churn by.
Eli: And not see that backwardation occur.
Eli: As a positive for us but.
Eli: We only know what the market tells us right now or we're willing to put our fingers on.
Eli: And that's what's reflected in the guidance.
Eli: I would just add as well there were some call. It one time capital recoveries in Q4, and just ensuring that those obviously aren't annualized into 2025. Those were selected in 2024. So just ensuring everyone on the call is aware of that and doesn't carry that forward.
Speaker Change: That's really good color there. Thank you and then maybe just on Cedar.
Speaker Change: It seems like the project risk profile has decreased meaningfully so.
Speaker Change: How should we think about future offtake contracts that you do sign maybe carrying a higher rate to reflect that.
Speaker Change: Can you give us some color about what kind of demand market Youre seeing I know you highlighted in the release there is a lot of demand so.
Speaker Change: Just just color on that contracting environment.
Speaker Change: So still again, so again, we went out and like you stated we do believe that we are derisking the project.
Speaker Change: We undertook and stepped up to the project.
Speaker Change: As such we are.
Speaker Change: We're out in the market.
Speaker Change: We've looked at.
Speaker Change: To benefit from that Derisking at this point in time and as I stated previously we've had loss of response and lots of positive response from both multinational oil companies and Canadian producers and LNG off takers today. So we're pretty excited about taking that next step and believe we are one derisking. The project as you stated, but at the same time <unk>.
Speaker Change: Proving improving the economics for the project as well.
Speaker Change: Great I'll leave it there thanks guys.
Robert: Your next question comes from the line of Robert Robert <unk> from CIBC capital markets. Please go ahead.
Speaker Change: Yes. Thank you I just wanted to follow up on the Green light.
Speaker Change: Project, a little bit here I Wonder if you could talk about the Genesis of the project and what attracted you to that.
Speaker Change: Gas fire power in the first place other than the integration aspect.
Hey, Robert do again, we started down the path.
We've mentioned and talked about our land adjacent to the Red water.
Speaker Change: Assets are low carbon complex and so we started looking for tenants and opportunities.
Speaker Change: To utilize that land and power generation was one of those opportunities we looked at in the early days the carbon sequestration Lincoln the connection to that.
Speaker Change: Things went on and we began working with the <unk> team.
Speaker Change: And as the market has changed and where this this power or what's the plan for the power sale as opposed to just selling into into the grid as such.
Speaker Change: <unk> changed and pivoted and we started talking about and began meeting with.
Speaker Change: Co locators in Hyperscale and we've seen this opportunity to take the power generation rate too.
Speaker Change: Midstream type model with long term contracts off the back end. So it quickly became very appealing to <unk> that we could make this look exactly like one of our other businesses and as you mentioned beyond beyond that and the success, we see with that change in the data center growth.
Speaker Change: Obviously, the interconnection, we always talked about providing services gas suppliers potential we have we have the capability and the infrastructure to provide gas to provide water to provide the land as I've already mentioned and so the integration opportunity just grew but wed like to project right from the start located on Atlanta.
Speaker Change: Yeah, that's helpful and that's a good segue to sort of a follow up here about merchant exposure.
Speaker Change: I'm curious just in general how much capital you're comfortable allocating to power.
Speaker Change: I don't know if theres a couple of other <unk>.
Speaker Change: <unk> co Gen three but.
Speaker Change: And then really the merchant exposure are willing to take on.
Speaker Change: For example, I know you want to contract this in a way that it looks like the rest of your risk profile, but.
Speaker Change: You have an internal load that can act as a bit of.
Internal hedge.
Speaker Change: And then.
Speaker Change: To the extent that your appetite is different than your partners for future phases. For example, they might want to do more on spec.
Speaker Change: And you're interested in doing or they're off ramps.
Speaker Change: We're in the circumstance, where you are not aligned with your partner that you don't have to.
Speaker Change: Subsequent phases.
Rob I'll start out I mean, I think first of all our intention here is is.
Speaker Change: To match the power load with the <unk>.
Speaker Change: Need from the facility. So we don't see ourselves getting into the merchant power business. That's not what this is about this is very much about leveraging the facilities in and around our existing assets leveraging the integration and obviously, having a really attractive.
Speaker Change: Sort of long term annuity with.
Speaker Change: Very high quality high.
Speaker Change: Creditworthy Counterparties.
Speaker Change: And the ability to use that to leverage the rest of our business.
Speaker Change: In terms of how much capital.
Speaker Change: We could see allocating to this I mean, obviously, we've talked about three phases as a part of this is sort of the initial piece.
Speaker Change: I think we need to.
Speaker Change: See where that goes and what I mean by that is we haven't talked about more than that.
Speaker Change: If the opportunities to grow our larger I think we will analyze that as as we always would but to.
Speaker Change: To go back to my initial response.
Speaker Change: This is not an intention to get into the merchant business. This is a long term fee based annuity just like the rest of our business.
Speaker Change: Yes.
Speaker Change: Okay understood and then finally, just wanted to follow up on the tariff question a bit here.
Speaker Change: I'm curious how you are changing your approach or.
Speaker Change: To the NGL marketing year.
Speaker Change: Given the threat of tariffs and now they've been seemingly kicked out to April which is not helpful. Given the marketing here.
Speaker Change: So are you doing anything in terms of language in your your agreements or other what are changing maybe the amount of exposure you want to have the marketing this year given the tariff front.
Speaker Change: Hey, Rob it's Chris Sherman.
Rob Hope: You mentioned the timing isn't great for the NGL contract year as far as sort of getting those contracts buttoned down.
Speaker Change: But.
Speaker Change: We'd been largely positioning ourselves not tariff specific but largely positioned positioning ourselves as much off the west coast.
Speaker Change: As possible and so that that's really helped insulate us.
Speaker Change: First of all and then and then I'd say secondly at least at least to date, we've seen a fairly reasonable approach.
Speaker Change: With buyers, where tariffs could have an impact.
Speaker Change: And I think we will certainly be adding terms that are tariffs specific and finding the right way to get that that business got it's not a it's not a big concern for us going into the NGL here.
Speaker Change: Yeah.
Speaker Change: Okay, great. Thanks, everyone.
Speaker Change: Your next question comes from the line of Ben Pham from BMO capital markets. Please go ahead.
Ben Pham: Hi, Thanks, Good morning, I wanted to go to your guidance you initiated last year, the 4% to 6%.
Speaker Change: And can you comment on on Directionally, what the caution groupon.
Speaker Change: Great contracting.
Speaker Change: The library is youre seeing going forward, how are you thinking about where you're tracking to that range.
Speaker Change: And then.
Speaker Change: Also is it your plan IRA actually is this an annual Roe.
Speaker Change: Youre contemplating on that guide are you is it more of a wait until <unk>.
Speaker Change: And then a couple of years old.
Speaker Change: Yeah, Hey, Hey, Ben its Cam here.
Speaker Change: I think.
Speaker Change: In terms of in terms of the guide.
Speaker Change: Obviously, we put it out last may.
Speaker Change: We're sort of halfway through it.
Speaker Change: I would say that.
Speaker Change: We're happy with what we're seeing.
Speaker Change: We're seeing good opportunities.
Speaker Change: <unk> focus on on that timeframe on productivity and sort of margin in the business certainly we're trending well.
Speaker Change: Sort of reluctant to quantify it at this point.
Speaker Change: In terms of exactly where we are but certainly we're very pleased with where we are tracking in the range.
Speaker Change: And I think there's a number of opportunities here.
Speaker Change: Which the team is working on and some of them will occur in that timeframe some of them will occur beyond but.
Speaker Change: We'd like to like to sort of see that come to fruition before we start to stretch the timeline out even further.
Speaker Change: I sort of mentioned that I think when we look at our guidance lots of lots of numbers out there in the peer group.
Speaker Change: We are we always talk about ours on a fee based.
Speaker Change: <unk> per share.
Speaker Change: And we think as we as we look at some of those comparable numbers from some of our peers.
Speaker Change: The 4% to 6% continues to stack up in line with our peers and well for the most part.
Rob Hope: Got it thanks, Thanks, Rob.
Speaker Change: Maybe a follow up on the alliance.
Speaker Change: I'm not sure maybe students.
Speaker Change: As things are going.
Wow.
Speaker Change: Can you unpack that a bit is that is that more.
Speaker Change: You feel pretty good about the timing that's all.
Get resolved made a little bit quicker.
Speaker Change: Expected in terms of discovery or.
Speaker Change: Or is it related to it that maybe something I'll say Europe. Thank you.
Ben Jaret: Hey, Ben Jaret here.
Ben Jaret: I can't really get into the details I think my commentary around it it's going well is is we have routine meetings with the shipper group the.
Ben Jaret: The shipper group is.
Ben Jaret: We're having great conversations in the room really trying to get down to brass tacks on what what all the parties want so that is the encouragement here and then.
Ben Jaret: I mentioned it earlier in the call, but hopefully in the May timeframe.
Ben Jaret: We're able to give a lot more color with respect to the progression of of commercial opportunities there.
Ben Jaret: Yeah.
Ben Jaret: Okay got it thanks, guys. Okay. Thanks, everybody.
Speaker Change: Your last question for today comes from the line of Patrick Kenny from National Bank. Please go ahead.
Speaker Change: Yeah, Hey, guys.
Speaker Change: I know theres been a lot on greenlight already but.
Speaker Change: Just wanted to confirm since you won't be in the driver's seat per se on the development and construction process.
Speaker Change: And I know what you're still currently in negotiations, but curious if you might be contemplating anything unique within your LP with kinetic core that.
Speaker Change: Mike mitigate or protect your exposure to the risk of cost overruns.
Speaker Change: The complex is built out just.
Speaker Change: Given this isn't really your core business.
Speaker Change: Got it.
Speaker Change: We in taking a step with greenlight and the JV that we've entered into we look back did our due diligence with respect the cana core capabilities, where they are sitting.
Speaker Change: The progress that they've made to date and became comfortable.
Speaker Change: We are we are a 50% partner as described.
Speaker Change: As we go forward, we made sure that we secured the correct governance that we need to have this.
Speaker Change: Go forward.
Speaker Change: With our controls in place and our oversight that we thought we needed as as we would go we're making sure that we have the right people to to stay on top of the project from from this position.
Speaker Change: We're comfortable where we're going.
Speaker Change: Yes, and just to remind.
Speaker Change: Again. These are these are not new they've just completed building Cascade power plant we're excited about.
Speaker Change: Working with them and again believes that we have made selected the correct partner for us.
Speaker Change: This endeavor.
Speaker Change: Got it okay. Thanks for that Steve.
Speaker Change: And then switching gears to northeast B C.
Speaker Change: Just with the renewed support.
Speaker Change: For our resource infrastructure in the province can.
Speaker Change: Can you provide a bit more color as to what you think industry might need over the near to medium term with respect to <unk>.
Speaker Change: Whether it's additional fractionation capacity or other infrastructure over and above what you might have in flight today.
Speaker Change: I'm thinking really especially you.
Speaker Change: Different win LNG, Canada sanctions phase two.
Pat Jaret: Hey, Pat Jaret.
Pat Jaret: Yeah, Great question. So obviously Scott mentioned in our call that we're proactively preceding account mentioned, where we're deploying capital on our northeast BC expansion.
Pat Jaret: With just what's in front of us with LNG, Canada phase, one cedar wood fibre et cetera, we see a material amount of of Ngls and condensate in and obviously your C III plus coming out of that area. So.
Pat Jaret:
Pat Jaret: Our long term view of the macro view will be not only does permanence projects are going to be required, but theres, probably other third party projects that are going to be required and that we're supportive of.
Pat Jaret: Taking place because the industry is going to require it especially with.
Pat Jaret: LNG, Canada phase III potentially on the horizon, maybe sue he gets a cedar to one day et cetera, et cetera, but there is a lot of.
Pat Jaret: There's a lot of very good momentum with respect to west coast exports with respect to fractionation.
Pat Jaret: Our RFS for project continues.
Pat Jaret: Really glad that we sanction that when we did it we're going to deliver that at a very effective cost per barrel. When you do the math on that Greenfield project and it's it's getting it's getting highly contracted and adding.
Chris Sherman: A bunch of more Ngls from yellow add debt Sherman's book on our marketing business takes up more NGL capacity. So we do believe macro that another fractionator will be required to meet that NGL demand, obviously, because we're tight our competitors have been talking about at Pembina has been talking about it and we think we're in obviously a really good situation to be able to.
Chris Sherman: To capture more of that growth opportunity as well.
Okay. Thanks, Jeff Yeah, I appreciate that and not.
Speaker Change: I'm not sure if you could provide any update on your application on the western pipeline system. It looks like we might get a decision in April.
Chris Sherman: But just wondering what.
Chris Sherman: What the financial impact might be if you do get the green light to shut down the line or not sure. If you took any provision in the quarter or not.
But maybe on the flip side, if you do need to keep the pipe are operating roughly what quantum of capital might be required to maintain the integrity of the line. Thanks.
Pat Jaret: Okay. Good question, Pat So yes.
Chris Sherman: Yes.
Chris Sherman: We shut down the southern portion of the Western line I think in 2022, we took that out of service. This pipeline is.
Chris Sherman: Significantly older than myself.
Chris Sherman: I would say that it's becoming it's getting too it's useful and of economic life, we're going to have to deploy more and more capital to maintain the operability of safe reliable operation of that asset.
Chris Sherman: Hence.
Chris Sherman: The abandonment application.
Chris Sherman: The financial impact is.
Chris Sherman: Immaterial to our overall business.
Chris Sherman: Taking the pipeline out of service. So we're just kind of working through that right now.
Chris Sherman: I don't think.
Chris Sherman: I won't get into the magnitude of the capital that's required to keep it in service.
Chris Sherman: But it's not a material amount.
Chris Sherman: Things considered with respect to our overall integrity program.
But it is a substantial amount of work internally for us to maintain that asset and keep it in the in the in the safe reliable operation that that we expect across our asset base.
Speaker Change: And Pat it's Kenny here I would just add that of course.
Speaker Change: There is a single customer on that line today and as has been the case.
Speaker Change: It's a cost recovery mechanism for capital spent in for.
Speaker Change: Repairs and maintenance.
Speaker Change: We would continue to expect that if.
Speaker Change: Investment was required going forward and that is obviously part of the.
Speaker Change: The dynamic here is weather, whether it can be operated in an economic way in the future.
Speaker Change: Understood. Okay. That's great. Thanks, guys I appreciate all the comments.
Speaker Change: Yeah.
Speaker Change: There are no further questions at this time I would like to turn the call over to Scott Burrows for closing comments. Please go ahead.
Scott Burrows: Thanks, everybody for joining us today, and we were very pleased to end the year with a very strong Q4, and some exciting new growth projects. So thanks to all of those on the call our investors our shareholders.
Scott Burrows: Our employees, we look forward to a great 2025. Thank you.
Scott Burrows: This concludes today's conference call. Thank you very much for your participation you may now disconnect.
Scott Burrows: Okay.
Scott Burrows: Yeah.
Scott Burrows: Yeah.
Scott Burrows: Yeah.
Scott Burrows: Yeah.
Scott Burrows: Yeah.