Q2 2025 Pembina Pipeline Corp Earnings Call
Speaker #1: Good morning, ladies and gentlemen, and welcome to the Pembina Pipeline Corporation Q3 2025 Results Conference Call. At this time, all lines are in listen-only mode.
Speaker #1: Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press *0 for the operator.
Speaker #1: This call is being recorded on Friday, August 8, 2025. And I would now like to turn the conference over to Dan Tucunel, VP Capital Markets.
Speaker #1: Thank you. Please go ahead.
Speaker #3: Thank you, Ina. Good morning, everyone. Welcome to PEMBINA's conference call and webcast to review highlights from the second quarter 2025. On the call today, we have Scott Burrows, President and CEO, and Cameron Goldade, Senior Vice President and Chief Financial Officer, along with other members of PEMBINA's senior leadership team.
Speaker #3: I would like to ind you that comments made today may be forward-looking in nature and are based on PEMBINA's current expectations, estimates, and judgments.
Speaker #3: 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 #3: To learn more about these forward-looking statements and non-GAAP asures, please see the company's management's discussion and analysis dated August 7, 2025, for the period ended June 30, 2025.
Speaker #3: As well as the press release PEMBINA issued yesterday. All of these materials are available online at PEMBINA.COM and on both CEDAR Plus and EDGAR.
Speaker #3: I will now turn things over to Scott.
Speaker #4: Thanks, Dan. Yesterday, we reported our second quarter results, which were highlighted by quarterly adjusted EBITDA of 1.013 billion dollars. We remain on track to deliver full-year results within our original 2025 adjusted EBITDA guidance range but, as Cameron will discuss in more detail, as we are through the halfway point of the year, we have updated the range to 4.225 billion to 4.425 billion dollars.
Speaker #4: On the project front, PEMBINA continues to demonstrate its ability to deliver capital projects that provide strong returns and a itive service offering. The CEDAR LNG project continues to progress according to plan and remains on budget and on time with an expected in-service date of late 2028.
Speaker #4: We recently celebrated the ievement of a major milestone for the project as construction of the floating LNG vessel began with steel cutting on both the topside facilities and the vessel hull.
Speaker #4: Onshore activities are continuing and marine terminal clearing, drainage, erosion, and sediment control pipeline right-of-way clearing and road upgrades have been completed. The market for LNG supply on the West Coast of North America remains strong and PEMBINA continues to progress remarketing of its $1.5 million tons per annum of CEDAR LNG project capacity to third parties and expects to finalize these efforts by the end of 2025.
Speaker #4: The RFS4 project continues progress towards an in-service date in the first half of 2026. PEMBINA is pleased that the project is trending approximately 5% under the previous cost estimate with a revised expected total cost of approximately $500 million.
Speaker #4: On a cost per barrel of capacity basis, PEMBINA is track to deliver its expansion 15% to 20% lower than competing projects currently underway, highlighting PEMBINA's advantaged service offering.
Speaker #4: Looking beyond 2025, strong business fundamentals continue to reinforce our outlook for low to mid-single-digit annual volume growth through the of the decade across all WCSB products.
Speaker #4: The outlook is supported by the strong economics and long inventory lives of the Monty Formation and oil sands operations. The resilience of our producer customers despite the volatility in commodity prices in the broader economy new egress projects, including LNG and NGL export facilities and potential oil pipeline expansions, combined with new demand from potential data centers and petrochemical facilities and a more supportive policy environment and momentum towards reshaping Canada's energy strategy in a way that could unlock Canada's abundant and diverse energy resources.
Speaker #4: Against the backdrop of growing WCSB, PEMBINA has differentiated itself as the only Canadian energy infrastructure company with an integrated value chain that provides a full suite midstream and transportation services across all commodities.
Speaker #4: Natural gas, NGL, condensate, and crude oil. Our scope, scale, and access to premium North American and global markets uniquely positions us to capture incremental new volumes while unlocking new avenues for growth.
Speaker #4: Pembina's ability to maintain and grow its position in the rapidly developing WCSB is supported by the recent developments and projects we highlighted in our WC yesterday.
Speaker #4: PEMBINA continues to strengthen its propane export capabilities and will soon have access to 50,000 barrels per day of highly competitive export capacity for its own and customers' propane through our own Prince Rupert terminal and a new commercial agreement with Alta Gas for 30,000 barrels per day of LPG export capacity and the current rivet and future reef facilities.
Speaker #4: In addition, PEMBINA has approved an optimization of the Prince Rupert terminal that, through increased storage capacity, will allow the use of medium gas carrier vessels.
Speaker #4: The optimization is expected to expand access to additional global markets with higher realized propane prices while significantly reducing shipping costs per unit, thereby improving net backs for Pembina and its customers.
Speaker #4: We also highlighted how PEMBINA and PGI continue to strengthen their relationship with leading WCSB producers and develop mutually beneficial solutions that support growing production while providing PGI with take or pay commitments that ensure the long-term utilization of its assets.
Speaker #4: PGI recently acquired from WhiteCap the remaining $8.3% interest in three gas plants and a sales gas pipeline from PGI's DuVernay complex. And currently, WhiteCap entered into a long-term take or pay commitment for firm service at the DuVernay complex and extended long-term take or pay agreements previously in place at PGI's KA plant.
Speaker #4: PGI has also entered into an agreement with a Monty producer to fund and acquire an under-construction battery and additional infrastructure in Wapiti North Gold Creek Monty area.
Speaker #4: The project enhances PGI's footprint in the Wapiti region, connecting directly into PGI's existing Wapiti gas plant. The North Gold Creek battery will be operated by the producer and highly contracted under a long-term take or pay agreement.
Speaker #4: Additionally, PEMBINA continues to advance more than $1 billion of conventional NGL and condensate pipeline expansions to reliably and cost-effectively meet rising transportation demand for growing production.
Speaker #4: These expansions include the tailored Gordondale project, which will be a new pipeline connecting mostly condensate volumes from Taylor, Columbia, to the Gordondale area. The Fox Creek-Tonomeo expansion, which is a proposed expansion of the Peace pipeline system that, through the addition of new pump stations, would add approximately 70,000 barrels per day of propane plus capacity to the market delivery points from Fox Creek, Alberta, Tonomeo, Alberta, and other expansions to support volume growth in Northeast BC, including new pipelines and terminal upgrades.
Speaker #4: The growth is secured by long-term contracts underpinned by take or pay agreements, areas of dedication across the Monty and DuVernay formations, and other long-term agreements that ensure a strong base of committed volumes.
Speaker #4: Final investment decisions on the Fox Creek-Tonomeo expansion and the tailored Gordondale project are now expected by the end of 2025 and the first quarter of 2026, respectfully.
Speaker #4: These fully supported demand-driven pipeline expansion opportunities, along with the success we continue to have in re-contracting legacy volumes, are taking place against the backdrop of increased competition.
Speaker #4: We remain confident in our ability to continue to grow volumes across our conventional pipeline system. Our Northeast BC and Northern pipelines provide a full product integration across all commodities and connectivity both upstream and downstream, combined with our marketing and export capabilities.
Speaker #4: We believe we offer customers the most competitive midstream service offering. As a reference point, the weighted average contract life on approximately $1 million barrels of firm contracted volumes on Peace and Northern is approximately seven and a half years.
Speaker #4: Despite the passage of time, this figure has remained relatively consistent over time and has, in fact, increased slightly over the past two years, reflecting our successful efforts to blend and extend existing contracts and sign incremental new long-term contracts.
Speaker #4: Building upon its position as leading supplier of ethane to a growing Alberta petrochemical industry, PEMBINA continues to work closely with Dow Chemical Canada. We are valuating the various options available to meet our commitment under the mutually binding $50,000 barrel per day ethane supply agreement.
Speaker #4: Most notably, engineering and commercial discussions are ongoing related to the addition of a de-ethanization tower at RFS3 within the Redwater Complex, and a final investment decision is now anticipated by the end of 2025.
Speaker #4: Finally, PEMBINA continues to advance opportunities to provide integrated solutions to support an emerging Alberta-based data center. Greenlight Electricity Center, a partnership between PEMBINA and Connecticor, is developing an up to 1,800 megawatt gas-fired combined cycle power generation facility and is an active discussion with a data center customer to commercially underpin the project.
Speaker #4: Greenlight successfully advanced through Phase One of the Alberta Electric System Operator allocation process and, through subsequent commercial efforts, has secured a sufficient megawatt allocation to achieve a viable scale for this project.
Speaker #4: In addition to the opportunity to invest in long-term contracted power infrastructure with an investment-grade counterparty, Pembina is well positioned to leverage existing and future value chains to further support this project.
Speaker #4: For example, the proximity of the Alliance Pipeline offers a potentially accretive expansion opportunity to provide significant natural gas supply to the Greenlight Electricity Center.
Speaker #4: In summary, the financial results continue to largely track our initial expectations for the year, and we continue to execute our in-flight construction projects and pursue expansions and new initiatives to respond to growth in the WCSB.
Speaker #4: I will now turn things over to Cam to uss in more detail the financial highlights of the second quarter.
Speaker #5: Thanks, Scott. As Scott noted, PEMBINA ed second quarter adjusted EBITDA of 1.013 billion dollars. This represents a 7% decrease over the same period in the prior year.
Speaker #5: In pipelines, factors impacting the quarter primarily included lower firm tolls on the coach and pipeline due to re-contracting in July of 2024, lower revenue at the Edmonton terminals, largely related to the decommissioning of the Edmonton South Rail terminal in the second quarter of 2024, lower interruptible volumes and lower tolls on the vantage pipeline, higher volumes on the Peace pipeline system due to higher contracted volumes and fewer outages compared to the prior period, which was impacted by the planned outages related to the phase eight Peace pipeline expansion, higher revenue on the Peace pipeline system due to increased tolls mainly related to contractual inflation adjustments, higher demand on seasonal contracts on Alliance, and higher contracted volumes on the Nipissi pipeline.
Speaker #5: In facilities, factors impacting the quarter included lower volumes due to planned outages at certain PGI assets and ongoing third-party egress restrictions impacting the Dawson assets, higher contribution from PGI, primarily related to recent transactions with WhiteCap.
Speaker #5: In marketing and new ventures, in marketing and new ventures, second quarter results reflected the net impact of lower net revenue due to a decrease in NGL margins as a result of lower butane and propane prices coupled with lower volumes resulting from third-party restrictions at the Shanahan facility and planned outages at both the Shanahan facility and the Redwater Complex, as well as higher input natural gas prices at Oxable.
Speaker #5: And finally, lower realized gains on crude oil-based derivatives, partially offset by lower realized losses on NGL-based derivatives. In the corporate segment, second quarter results were higher than the prior period due to lower incentive costs driven by a change in Pembina's share price in the period compared to the second quarter of 2024.
Speaker #5: Earnings in the second quarter were $477 million. This represents a 13% decrease over the same period in the prior year. In addition to factors impacting adjusted EBITDA, the decrease in earnings in the second quarter was primarily due to the net impact of costs associated with an asset retirement at the Redwater Complex, lower share of profit from PGI as a result of higher depreciation expense due to a larger asset base following the recent transaction with WhiteCap, lower other income due to no similar gain to that recognized in the second quarter of 2024 related to PEMBINA's cial assurances assumed by CEDAR LNG upon positive FID, lower acquisition and integration costs, and finally, no similar net gain on acquisition to that recognized in the second quarter of 2024.
Speaker #5: Total volumes in the pipeline and facility divisions were 3.6 million barrels of oil equivalent per day in the second quarter. This represents an increase of 1% over the same period in the prior year, reflecting the net impact of higher contracted volumes on the Nipissi pipeline and Peace pipeline system and lower volumes at PGI, Redwater, and Oxable due to planned outages.
Speaker #5: Turning to the full year, as Scott mentioned, we updated our 2025 adjusted EBITDA guidance range to 4.225 billion to 4.425 billion dollars. Within our full year outlook, due to seasonal and asset-specific factors, PEMBINA expects third quarter results to be largely consistent with second quarter results, with stronger results expected in fourth quarter.
Speaker #5: First, while PEMBINA continues to benefit from rising utilization throughout its conventional pipeline and gas processing assets that aligns with volume growth across the Western Canadian sedimentary basin, revenue volume growth at these assets is expected to be slightly lower than physical volume growth on a percentage basis as customers expand into their contractual take or pay commitments.
Speaker #5: Second, we anticipate the typical seasonality positively impacting Alliance in the fourth quarter due to the ability to transport higher volumes during colder periods. This is expected to be offset by the impact of the previously announced settlement agreement with shippers.
Speaker #5: Third, as usual, we expect a significant portion of our integrity and geotechnical costs on pipeline assets in the third and fourth quarters compared to the first half of the year.
Speaker #5: Fourth, we are forecasting a higher contribution from PGI in the second half of 2025 compared to the first half of the year, including at the Dawson assets, due to third-party restrictions impacting the first half of the year and the startup of LNG Canada benefiting the second half of the year, as well as at DuVernay complex due to higher second half volumes.
Speaker #5: And finally, we are forecasting a stronger fourth quarter contribution from the NGL marketing business relative to the second and third quarters due to typical seasonality of the WCSB frac spread business.
Speaker #5: We have also revised our outlook for the company's 2025 capital investment program, including capital expenditures and contributions to equity accounted investees, to $1.3 billion, which is a $200 million increase compared to the prior outlook.
Speaker #5: This update reflects continued progress on previously identified core business initiatives as well as two tuck-in acquisitions at PGI, offset by certain projects being under budget.
Speaker #5: I'll now turn things back to Scott.
Speaker #4: Thanks, Cam. In closing, we remain focused on delivering value to our estors by best serving our ustomers, employees, and communities. We are looking forward to delivering second half results in line with our full year 2025 guidance, progressing key proposed projects towards final investment decision over the coming few quarters and finalizing our CEDAR LNG capacity assignment by year end and continuing to progress new initiatives like the Greenlight Electricity Center and related expansion projects within PEMBINA's value chain.
Speaker #4: Thank you joining us this morning. Enjoy the rest of summer, and we look forward to meeting with you in person or speaking to you soon.
Speaker #4: Please go ahead and open up the line for questions.
Speaker #1: Thank you. Ladies and gentlemen, we will now begin the estion and answer session. Should you have a question, please press star four by the one on your telephone keypad.
Speaker #1: You will hear a prompt that Johannes has been raised. And should you wish to cancel your request, please press star four by the two. If you are using a speakerphone, please lift the handset before pressing any keys.
Speaker #1: One moment, please, for your first question. Thank you. And our first question comes on the of Aaron McNeil from TD Cowell. Please go head.
Speaker #6: Hey, morning, all. Thanks for taking my questions. I'm hoping that you can just take a moment to address some investor feedback that we're iving.
Speaker #6: There's sort of this, I 't know what I guess I would call it a death by a thousand cuts narrative out there and if I were to sum it up as a theme, it's really just about different ways where PEMBINA's incumbency in the Canadian NGL value chain is being challenged.
Speaker #6: The theme covers a lot of ground in several specific points, so I can appreciate that it's difficult to touch on everyone. But how do you respond to that criticism?
Speaker #6: What do you think misses, if anything? And what do you see as the sort of unique value proposition for investors going forward?
Speaker #4: Thanks, Aaron. It's a Scott, it's Scott here. There are a few things I think that we need , I guess, level set or unpack on that question.
Speaker #4: I'll try to address it at a high level versus kind of going through every specific point. But to me, there's a difference between fundamentals and temporary noise.
Speaker #4: And when you have kind of the extensive franchise that we have in the Canadian midstream space, you know I'd say the bar is very high and there's always going to be something to pick at.
Speaker #4: When I step back and get out of the noise and kind of look across the horizon at fundamentals, I firmly believe that our business is rock solid and is driven today, as it always has been, by customer demand for our services.
Speaker #4: When you think about the resource in the Montney, it's unbelievable. The basin is growing, and it's full of visible catalysts. You know, there's gas egress through LNG, new LNG exports, Tidewater egress for oil, and new avenues to create value for customers with hydrocarbons. Whether that's incremental petrochemical demand or incremental gas to power.
Speaker #4: There's a lot of visible catalysts that we see coming at the basin. And when I think about PEMBINA specifically, you know I think we're the only franchise that directly benefits and is involved in all of these catalysts.
Speaker #4: If you ink about them, one by one, there's direct LNG export ownership with the first of its kind partnership in Canada. We have significant LPG export capacity proprietary and in partnership with our midstream peers as talked about.
Speaker #4: There's local Alberta demand, East Coast Sarnia access, and cost-effective unit trains across the U.S. So we really have an unparalleled marketing basis when it comes to LPG.
Speaker #4: We hit all markets. We have a significant and growing condensate franchise supporting oil sands growth, which we continue to see growing with debottlenecks across the system.
Speaker #4: We're currently providing gas egress in a rained environment with access to high-value markets in the mid-continent in alignment with long-term shippers. You know we're supporting the standup of a world-scale cracker both through feedstock supply and ancillary midstream services.
Speaker #4: And we're continuing to look to extend our value chain and lead the way for our stakeholders and ustomers. You know we evolved the midstream sector in the early part of last decade, building integrated value chain, which is the core of our franchise today.
Speaker #4: And now we're continuing to lead the sector through value chain extension initiatives and provide optionality for our customers. Our competitors are looking to build the Pembina from 8 to 10 years ago.
Speaker #4: What we're trying to go to where the balls are going, not where it's been. What's undeniable is that the WCSB is growing and PEMBINA will capture its share of this growth for the reasons I just mentioned while continuing to execute on our disciplined customer-supported growth projects.
Speaker #4: In the core business, you know I ink a real-life proof point of that is the billion dollars of visible capital deployment that we talked about for peace capacity today.
Speaker #4: You know in a growing basin, we and thers are competing to provide value-added services to our producer clients. And on that basis, we are confident in the resilience of our performance.
Speaker #4: We're not going to win every barrel. That you know we know that. But we do believe we're going to win our fair share. So the noise as you mentioned or death by a ousand cuts, you know it can be a distraction from what's important.
Speaker #4: But in my mind, long-term excellence and execution is what's important. And I believe that we have an unparalleled track record in the NGL midstream space.
Speaker #4: So hopefully, that answers your question. Happy to take any follow-on.
Speaker #6: Yeah. I guess just as a follow-up, you mentioned growth. Across the basin, we saw you bump the capital spend for the year and you know you outlined all the growth opportunities.
Speaker #6: Last quarter, I think Cam mentioned you know the potential for a buyback. It seems as though maybe that the narrative is shifting more to a growth orientation.
Speaker #6: So maybe you can sort of just give us a sense of your latest thinking around capital allocation.
Speaker #4: Sure. Maybe just to address part of the question, you ow when I think about the capital program, what I think is important is the majority of that capital was due to the bolt-on acquisitions that we made in the quarter.
Speaker #4: As well as the advancement of some of our projects. Recall when we put out the capital release we talked about potential increment. We had a baseline capital and then we had a bucket incremental capital should we advance some of our projects.
Speaker #4: And that's really what this is tied to. We're vancing projects. I think what's lost in that mix, and I just want point out, is that as offset by capital savings across our projects as we continue to execute our projects.
Speaker #4: So I just don't want to leave the listeners with an impression that that increase has anything to do with cost overruns. That's all incremental new growth.
Speaker #4: And it's actually offset by cost savings across many of our projects.
Speaker #7: Hey, Aaron. It's Jared here too. And just kind getting back to your original question, you were talking about you know some of the noise and you ow maybe misconceptions.
Speaker #7: I think last week, one of Western Canada's largest producers came out and talked about some substantial growth terminally and talking about growing their their overall production by 200,000 BOE a day in the next kind of six years.
Speaker #7: We view that as extremely positive. And I think all midstreamers should view that as extremely positive. The investment that that organization is making in Western Canada and the quality of their reserves.
Speaker #7: There was some, you know, we obviously got some inbounds with respect to margin erosion, etc., with respect to some of their announcements. And, you know, that's where I think that clarity is required. They talked about a dollar per BOE.
Speaker #7: That could be captured. But it required them to get to $850 thousand BOE a day. And they also talked about how that value creation is split between operating costs which I have to think is is in their camp.
Speaker #7: They're ing something different. To save OPEX. And then they talked about 50% of that being transportation value creation. That transportation was represented in a BOE basis.
Speaker #7: So barrels of oil equivalent, not just straight-up liquids. So we only move terminally liquids today. So you ow that could be gas egress, value creation.
Speaker #7: That could be rail value creation. That could be trucking. That could be liquids pipelines, etc. So just what I kind of wanted to chat about that.
Speaker #7: And overall, I would say as customers in Western Canada grow physical barrels, they're typically their dollar per unit does go down. That's not uncommon.
Speaker #7: And specifically, our Northeast BC pipeline which they are a customer on, that's a cost of service pipeline. And as volumes go up, tolls go down just like any other cost of service pipeline in North America.
Speaker #7: Lastly, just what I think that a lot of our listeners probably don't know, in 2022, we announced a fairly large commitment with terminally for a chunk of their Northeast BC development.
Speaker #7: And that long-term deal for pipe and frac those tolls don't change. Those are fixed tolls that we offer the customer. And take pride in giving fixed tolls.
Speaker #7: And providing highly reliable service. So, yeah, I just kind of wanted you to know that that's some of the noise that I think requires a little bit of clarity.
Speaker #7: But overall, we're extremely excited about one of Western Canada's customers growing by $200,000 BOE a day in next couple of years. So. Just to provide some color.
Speaker #7: And maybe I'll just close it out on your question on capital allocation, Aaron. I mean, listen, I think you know we've been pretty consistent for some time in terms of our approach to buybacks.
Speaker #7: Looking at the relative risk-adjusted economics, you know obviously, we've been continuing to do that. We've talked about our free cash flow profile over the next couple of years.
Speaker #7: Likely staring at a modest amount free cash flow in 2025 and likely flattish to perhaps offsetting that in 2026 based on the period of the CEDAR spend.
Speaker #7: And ultimately, looking at it over a multi-year time period, I think obviously, we continue to take data points and continue to look at the relative economics.
Speaker #7: And we'll do that. And sort of without signaling our intention either way here, either way here today, obviously, it's something that we talk about sort of every week.
Speaker #6: All right. Thanks, everyone. I'll turn it over.
Speaker #1: Thank you. And your next question, comes on the line of Maurice Choi from RBC Capital Markets. Please go head.
Speaker #8: Thank you. And good morning, everyone. I just wanted to follow up on some of the comments you've made Scott. Given how you've mentioned that you are seeing strong WCSB fundamentals and also your confidence in winning your fair share, how do I translate all that to a long-term EBITDA growth rate?
Speaker #8: Is it about starting with the low to mid single-digit volume growth through the end of the decade and then from there you add on incremental CAPEX-driven growth?
Speaker #8: So just your thoughts on that.
Speaker #4: Yeah. Thanks for the question, Maurice. I ink you know for from a guidance perspective, at our last investor day, we provided our guidance out towards 2026.
Speaker #4: And that's the extent of our guidance at this stage. You know as we move to the end of '25 and into '26, we will look to refresh that guidance going forward.
Speaker #4: So you know I'm not prepared to ive you a multi-year EBITDA guidance outside of what we've already publicly disclosed. You know but from a volumetric perspective, as we mentioned, in our prepared remarks and in what you've heard from us before, as we continue to see somewhere in the neighborhood of mid to high single-digit growth in volumes across the basin, mainly driven by the catalysts that we talked about previously.
Speaker #4: So, no real change from what we've discussed previously.
Speaker #7: Maurice, it's Cam here. I guess I would just supplement and appreciate you know history is not always a perfect example of the future. You know if you look at history just as one proxy, and you can look across our business, but you know just focusing on the conventional for a moment because that's we often talk about as a proxy.
Speaker #7: You go back five years and actually, you ow our growth in that business and the growth in our business overall was always through a combination of volume growth, but also margin.
Speaker #7: And margin you know comes from a number of pieces. Obviously, you know we have some contractual elements to that. We we do that through operational excellence and reducing our own cost structure.
Speaker #7: But you know as much or more of the growth came from that piece. And so I think you know as we think about the future, I think we actually see really constructive volume growth as we look out over the next five years.
Speaker #7: You know perhaps even stronger than we've seen in the last five depending on product and obviously egress restrictions. And obviously, you know we're continuing to do the hard work internally to continue to make our service offering more competitive, more creative, and obviously continue to be able to generate value through margin as well.
Speaker #7: So I would say you know that partly underpins our view on the long-term outlook.
Speaker #8: Sorry. Just a ickly follow-up on that. You said you know the volume growth is really constructive and stronger than you've seen in the last five years.
Speaker #8: You also said generate value through margin. Are you seeing margin as being one where you maintain margins or do you think that margin growth can also potentially come given a competitive landscape?
Speaker #7: Yeah. I think there's two areas to answer that question. One is obviously you ow in the past couple of years, we've had a couple you know sort of meaningful toll resets on some cross-border assets, namely caution and alliance.
Speaker #7: And obviously, that you know that has has been a headwind on the margin side tough to tough to get away from that. But I think you know in the rest of the business, our conventional business, our our gas processing business, our frac business, you ow we've we've done a lot of really solid things and continue to do things you know for ample, our our Prince Rupert announcement yesterday in terms of medium gas carriers.
Speaker #7: You know that's a margin enhancement activity right there. And so we're looking for ways you ow our team is really focused on doing that.
Speaker #7: And I ink you know viously, the business is evolving. You know obviously, competition is greater than it's ever been. But I think as Scott said in his introductory comments, you ow we continue to believe that we have the very best franchise across the board.
Speaker #7: And so that gives us an advantage in terms of maintaining and frankly growing that margin.
Speaker #8: Understood. And if I could just finish off with a comment you made on press release about evaluating further expansions to support volume growth in Northeast BC.
Speaker #8: I know you have the Taylor's Gordondale project out there right now. But just curious on your thoughts about the long-term competitiveness of Fort Sask facilities versus the existing new ones in Northeast BC.
Speaker #8: Particularly given how some of the propane butane incrementally setting out west for export.
Speaker #7: For Maurice, Jared here. Yeah. Great question. You know first off, I the competitiveness of Fort Saskatchewan in totality not just PEMBINA's frac I say is still a very attractive just and the reason why say that is that the majority of the NGLs that come into Fort Saskatchewan today, regardless if it's Dow, PEMBINA, Kiera, Plains, etc., they're all coming from downstream of North Pine.
Speaker #7: Right? So there's there's kind of like a maybe a an imaginary line where where products want to come into Fort Saskatchewan. You know and a significant amount those are coming from Alberta.
Speaker #7: A very large amount of the NGLs coming from Alberta. So also then you need to look at the diversity in the rail connectivity. So there's obviously going to be portunities at a significantly smaller scale.
Speaker #7: If you looked at all the C3 plus capacity in Fort Saskatchewan, compared to North Pine one, two, or three even, they don't even compare in size and scale.
Speaker #7: Rail connectivity, inlet storage, caverns, etc., etc. Like there's a lot of efficiencies. Pardon me. Coming into Fort Saskatchewan. Further to that, pardon me. Further to that, the Northeast BC frac, you're going to be dedicated solely to the West Coast.
Speaker #7: Now, you know short-term Fay arbitrages, you know they look extremely good. And we believe long-term they're going to be good. But there is, we believe, and I think even some of our competitors have talked to this, there's optionality in having the ability to go to Sarnia, into Conway, into Mount Bellevue, and meeting kind of that diversified North American market while having access to the West Coast market.
Speaker #7: So are there going to be opportunities to build smaller scale frac in certain areas? Absolutely, there is. If you're close to rail and those types of things.
Speaker #7: If you want to it at a massive scale, and you ow provide that redundancy and that optionality for a diversity, I ink customers are going to continue to come to the Fort.
Speaker #7: Like they have been for a really long time. But I'm not it's not I'm not saying that there's not small opportunity niche opportunities. Maurice, it's Cam.
Speaker #7: 'll just pile on one last thing. And I think you know to complement what Jared said, you know the analogy would be other products.
Speaker #7: So you know whether it's the natural gas value chain, whether it's the oil value chain. I mean, viously, there's been export market opportunities in both of those.
Speaker #7: And you know customers have have long chosen to diversify their market egress options for a number of reasons. And one of those is obviously market ARBs, premium markets do ebb and flow.
Speaker #7: There's operational redundancy reasons for that. So you know I ink that's what we really like about our offering. And obviously, the export piece, you know complemented by the announcements that we made yesterday and obviously the week before, absolutely enhance that.
Speaker #7: But we also really like sort of the other pieces of our portfolio and think it's an incredibly competitive offering. And frankly, one that no one else has.
Speaker #8: Understood. Thank you very much for that.
Speaker #1: Thank you. And your next question comes on the line of Robert Catellier from CIBC Capital Markets. Please go ahead.
Speaker #6: Hey, good ning. And thanks for the fulsome discussion so far. I want to touch on that last point that you made, Cam, about other products.
Speaker #6: Exports have been a part of your philosophy for a while now. I'm just curious what your long-term plans are for ethane. Any thought given to eventual waterborne exports of ethane?
Speaker #4: Hey, Rob. You know, I think for us, if we back up and again look at the fundamentals and the macro, there is a significant amount of ethane—not just Pembina, but across the basin being produced.
Speaker #4: And quite frankly, reinjected in the WCSB. So the amount of ethane available here could lead to various options, whether it's further petrochemical investments within the province or other opportunities.
Speaker #4: As it specifically relates to ethane, the challenge right now is the location of the ethane and where it's produced and where it needs to get to.
Speaker #4: And we do not believe as of right now, you know there's a scalable amount of ethane call it in Northeast BC to support a pipeline because this would need to be pipelined to the West Coast.
Speaker #4: And the economics just aren't there yet. So you know we do believe that it's an opportunity in the future. But right now, the economics of it look challenged.
Speaker #6: Okay. And then what are your thoughts on how the competitive landscape changes if Kiera completes the Plains NGL acquisition as envisioned?
Speaker #4: Yeah. You know from our perspective, those assets exist today. They exist in Plains in a very in a very competent and you know very fierce competitor.
Speaker #4: So from our perspective, not a lot changes in terms of assets that exist today, capacity exists today. So you know they were owned by a formidable competitor.
Speaker #4: And they're going into a formidable competitor's hands. So not, you know it's kind of business as usual for us.
Speaker #6: Okay. And then last one for me. I'm just wondering if you could comment on how the marketing conditions have evolved since your last update and maybe if you can provide any update to the frac spread hedge book for 2026.
Speaker #7: Hey, Rob. It's Cam here. I'll take that. I guess what I would say is that the frac spread hedge book is substantially on, excuse me, the marketing plan is substantially on plan.
Speaker #7: You know, if you look at where we are on the NGL side, it's tracking very close to budget. You know, if you look at propane prices and gas prices, you know, they kind of bounced around.
Speaker #7: And frankly, that's in spite of a ton of variability and a ton of volatility. In Chicago, obviously, that gas has been a little bit stronger.
Speaker #7: Which is obviously been a net positive for Alliance. And obviously, a bit of a headwind for Oxable. But you know sort of net-net. You know and I ink what we have observed is that the crude oil complex has clearly been highly variable.
Speaker #7: You know we're likely seeing you ow somewhat you know more modest storage opportunities. Albeit recognizing that that's a you know a relatively small piece of the marketing book.
Speaker #7: But I think if you take my comments and the guidance and the guidance update you know together, you know we're sort of talking at the margin.
Speaker #7: Differentials have obviously been a little bit narrower than they were in the fall. So, all those pieces together, I'd say we're very close to where we were.
Speaker #7: Maybe just slightly lower than budget time. But you ow clearly, I think what we do see as tailwinds is you know I ink if you went three, six months, we were looking at a stronger ACO strip as we got into the fourth quarter of this year.
Speaker #7: And obviously, we've observed that as months have ticked by here, even following the startup of LNG Canada, you ow obviously, there's still quite a bit of storage to work through on the Canadian gas side.
Speaker #7: And so that you know that strength has been pushed out. You know that is obviously in the near term. Supportive of our NGL business.
Speaker #7: As far as the 2026 outlook for hedges, you know you'll remember that about two or three years ago, you ow we went to a more dynamic hedging strategy, which effectively involved you know sort of looking at our looking at our own market knowledge, looking at the probabilistic outlook of where the business was and sort of right-setting our hedge levels based on that.
Speaker #7: As we sit looking at 2026 at the moment, you know we're relatively modestly hedged. Because you ow we see we see the P levels you know sort of kind of at or slightly below a P50 level.
Speaker #7: And so, from that perspective, we do see some constructiveness coming. I think particularly, as I mentioned, you know, in the natural gas space. And so, we've really opted to defer our hedging probably a bit later than we have in the past because we do believe that there's some constructiveness to the market.
Speaker #6: Okay. Thanks for that update.
Speaker #1: Thank you. And your next question comes on the line of Ben Sam from BMO. Please go head.
Speaker #9: Thanks. Good morning. First question on CEDAR LNG. Do you talk about your progress on the remarketing? It sounded like was a qualitative positive tone on it early this year in terms of solidifying something.
Speaker #9: Could you share progress going forward? Is it more oversubscription versus the capacity and as a more narrow in terms of the conversations there?
Speaker #7: Hey, Ben. It's Stu. Yeah, we know the remarketing of our capacity; you know, we're very pleased with the progress that we've made to date.
Speaker #7: We've engaged with multiple counterparties, and through that process over time, we have continued to refine our discussions. We are exchanging agreements with counterparties at this point in time.
Speaker #7: And looking to, as Scott already described, finalize definitive agreements in 2025. As far as the capacity, you know we've always had the intention of selling a portion of it.
Speaker #7: And you ow are open to and considering selling the entire 1.5 MTPA. And those conversations have begun. And again, are part of what we expect to close at this point in time.
Yeah, well I been I I think as we think about this year's Capital program and next year's Capital program they're they're largely committed. Um in in terms of advancing, you know, FID projects like Cedar, vast majority of next year's Capital is is Cedar Capital, um, as well as pipeline Capital. We've, you know, signed agreements that require us to build and expand the, the, the pipeline. So, the majority of the capital is, is committed to towards, uh, FID projects. But buying back stock versus, uh, growth capital is, is always, you know, a, a constant debate amongst our team here and, and with our board, but right now, um, as as we've talked about Capital dedicated to projects and the projects, we are considering, you know, generally enhance our franchise, um, buying back stock is, is a nice economic outcome, but it doesn't necessarily enhance your franchise and enhance the service off.
Offerings that you can provide to your customers. So um, it's always it's always a balance and of course as as as stock prices go down it increases, the the discussion um as it relates to, to BuyBacks. But, but right now for, for this year, and next year, the capital program is essentially locked down for for existing projects.
Okay, got it. Thank you.
Thank you. And your next question comes from the line of Jeremy tonette from JP Morgan. Please go ahead.
Hi, good morning.
Hey, Jeremy.
LPG export, uh, strategy and uh, do you see kind of, you know, more Partnerships going forward? Uh, versus uh, you know, uh, growth projects to expand your capabilities or just wondering if you could talk a little bit more there on the thought process and what we could expect going forward.
Um, well, well, I think, for now, we're, we're happy with the 2 announcement that that we made, uh, today. Um, you know, obviously the, the Alta gas, uh, 30,000 Barrel a day, uh, incremental contract and the investment in our own uh, in our own facility to optimize, uh, for for us right now. I, I think getting the mgc's up and running in advancing, that project is a big Focus. Like any asset we will continue to look to to optimize that facility as cam pointed out earlier. The mgc's are an optimization of that facility. Um, and as we as we get closer to in service of that, what we will again look to optimize that, whether it's, you know, lowering continuing to lower the cost of that or potentially optimizing shipping and rail which can increase capacity. So optimizations, remain key. Um, and then augmented with our Alta gas agreement, we're pretty satisfied. Now, that being said, if you listen to our comments around volume growth and pipeline growth, we can continue to see uh, growth
Both in the NGL space. Um and as those NGL volumes grow towards the end of the decade, you know, we will continue to assess where the optimal markets is is for those barrels. And as Jared pointed out, you know, it's always good to have optionality in any product in any marketing. Um, because while arbs are open right now, we know that herbs aren't always open. Um, and so we will, you know, look to continue to build out our our assets in Fort Saskatchewan. Um and as we as we secure more barrels, we will look to where the optimal markets are and that that could be further barrels off the West Coast or it could be to other markets depending on um uh the time and where the markets are open at that time.
Got it. That's, uh, helpful. Thank you. And just want to pivot towards, uh, Project Green Light, if I could. It sounds like there's, um, good, I guess, uh, commercial progress there. I was wondering if you could provide maybe a little bit more color on how that's coming together. I guess, you know, when you could see more signings or getting closer to visibility on what FID could be possible.
Yeah, thanks. It's due again. Um, yeah. As you as as you stated I I think we've made you know tremendous progress on on the green light project uh with our partner kinetochore. Um you know we worked hard as a team and a group to to successfully Advance through uh Phase 1 of the uh ASO uh allocation process and with subsequent commercial efforts
You know, the product was able to um sufficiently uh secure uh a megawatt allocation that will allow you have a viable scale that the project can move forward. Um, that was very exciting for us, uh, that that allocation of Bagel Box Off the Grid is a stop Gap. Measure until we can get, uh, our, our facility built the, the power generation facility. Um, you know, we're taking all the steps necessary to, you know, progressing all of the elements such that our project could be in service, uh, in 2029. And so we're very excited about that and uh, you know, we're working with, uh, commercially working with the off taker of that power, uh, they would be in service. The data center itself would be in service in 27, consuming that grid power that I just talked about, um, and then switching over to uh, the, the generated power from our site. Um, we're having very good conversations, uh, with commercially and, you know, our expecting to to um, you know, further those through the remaining part of 2025 and, and
Are excited about uh, you know, the progress that's been made.
It's kind of their late in July with the settlement. We also, um, talked about the expression of interest to expand Alliance kind of that interprovincial. Um, shortfall and the interest there. That would obviously, you know, feed a lot of the gas that would go into Project Green Light. So, the interest there is extremely high. So yeah, it's all coming together.
Got it. Thanks for.
If uh, you could provide maybe a little bit more color with regards to commercial discussions, there as we approach uh, in in service how I guess the impacts the uh the tone of those conversations.
Yeah, I I think from where we were a year ago um you know, we are FID, which is obviously a key Milestone where a year closer to in service and the Project's real. I mean, if we were we were as I talked about with the steel cutting has happened. We were up in kitamat last week and the, the progress along the, the terminal on the Riteway is is tremendous. So that's garnered real interest from multiple counterparties which has led to you know a broader a broader um process and you know as Stu mentioned we we've seen significant interest. Um and we're very optimistic about getting these deals done here in the next quarter or 2.
Got it. Sounds great. Thank you.
Thank you. And your next question comes from the line of Patrick Kenny from National Bank Financial. Please go ahead.
Thank you. Good morning. Um, just on PGI, on the back of these most recent tuck-ins, I was just wondering if perhaps you could provide a bit more color on, you know, what the opportunity set looks like. What else you're seeing out there in terms of low-hanging fruit, consolidation, or investment opportunities, you know, that you could add to the portfolio. What type of assets or resource plays across the base and what looks most interesting?
And also on the back of that, if you had an update on what the remaining internal funding capacity of the JV looks like going forward, that'd be great. Thanks.
Yeah, so obviously you know when we created PGI, there was obviously some...
Street, like having cake hours a partner and and they've been a great partner. It's been a tremendous outcome that business has grown tremendously. And it continues seems like quarter of a quarter. Uh, Chris and his team are, are pumping out. Uh, new integrated deals, feeding, feminist value chain. Um, you know, their strategy really is to focus on number 1, high-quality resource, um, you know, focus on liquid Rich resource that's going to feed, uh, the peace Pipeline and into, you know, the approximation of complex Etc, um, focused obviously, on C.
Customers who, uh, typically don't build their own, uh, processing infrastructure and and batteries and those types of things. So, there's a lot of opportunities out there, um, some recent acquisitions, um, some um, some lands have changed hands and those types of things. Um, you know, there's opportunities out there to build new Greenfield, but there's a lot of opportunities for us to expand our existing footprint. Like, you know, we're doing a work at K3 right now wity expansion. Uh, we did a small um uh expansion at our height complex. Like so there's a lot of Brownfield opportunities specifically in the sour gas space. Um, that's obviously where western Canada is is ultimately constrained is is sour gas processing and we have a lot of it, a big portfolio of it and extensive pipelines that interconnect, a lot of that. So those are kind of the, the Brownfield Greenfield short opportunities, um, with respect to, you know, targets or Acquisitions. Um, can't really speak to that, obviously.
You know, I'd have to have, uh, careers backing to speak to anything like that. But, um, we're always looking, like we are here at Pembina, and if the right, uh, opportunity presents itself, we will be on it.
And maybe I'll let cam talk to the.
Near-term. Uh, clearly. You know, I think that that JV has done exactly what it was intended to do. Uh, and and the performance from it has been has been very solid across the board and and so continue to have strong access to Capital to execute the strategy.
And then I guess, you know, zooming out on a Consolidated basis. Um, just looking at the upsized capital budget for the year. Might be a bit early here. I appreciate to give us a sense as to how you're thinking about 2026, but just wondering given all the pro, uh, potential projects that are still in the queue.
Uh, Cam, if you had a sense as to what your internal funding capacity might look like coming out of 2025 based on...
You know, now that you've turned up your financial guidance for the year, where you see the balance sheet exiting the year. And, you know, based on run rate, free cash flows.
Yeah, sure. Uh, it's a great question Pat. So, uh, first of all, I mean, I guess reminder that, you know, we've, we've been pretty clear and pretty consistent over time around our our Target leverage and our our, I guess our financial Theory, or our financial orientation, which has always been around a strong, uh, Triple B rating. And ultimately, uh, you know, looking at, uh, targeted proportionally consolidated debt debit, uh, kind of in that at 3 and a half to 4 times. You know, obviously we've we've we've had, the, the official range kind of up to 4 and a quarter. And, and that's really meant to capture frankly situations that we're in right now.
And I think what, you know what, I speak to when I say that is obviously, you know, we're in the middle of a, of a 4 year, build project with cedar LNG. And, and something that, you know, is a crewing debt, uh, each year, uh, but with no positive EBT contribution until, uh, until late 2028. And so, obviously, that, you know, that shows up in the leverage metrics, it'd be it'd be, um, it'd be wrong to, to disregard that entirely. And so, as you'd see our leverage metrics, you know, sort of, uh, Notch up a little bit, you know, uh, into 2026. It's really as a function of that. You know, if you start to back that out, uh, we're really comfortable in, in the leverage range of where we are, uh, and, and really Square within that target range. Uh, as for uh, you know what the funding looks like. Uh, you know, I would say, obviously I mentioned earlier that, you know, we've got a a bit of free cash flow, this year, modest amount based on our our current forecast. Uh next year, you know we probably are slightly the other way, you know, we're probably modestly.
In a, in a deficit position. But, uh, you know, on a multi-year basis, I think we are, are free cash, flow neutral, uh, to slightly positive, uh, based on, uh, you know, our 3 year range that we disclose back at investor Day last year and so that, you know, continues to afford US, uh, you know, a strong position I think as we've talked about and and the ability to sort of uh still sees opportunities if if and when they you know, they come about um because uh because of our strong financial position.
Okay, that's a great Cam and uh Jared appreciate the color on PGI. Thanks.
thank you and your
Next question comes from the line of Teresa Chan from Barclays. Please go ahead.
Thank you. Um, as a follow-up to the, uh, uh, discussion of the competitive Dynamics earlier. Um, given that it does seem to be intensifying whether that be from traditional Midstream players, or your customers, taking some of these mystery and activities in house. In addition to the level
Of contracting that you have a cross, your portfolio, and the 7.5-year average duration comment. Um, how do your fees compare to alternative options? Whether that be the competing pipeline system across your footprint or different modes of transportation to the BC West Coast for export. Can you help us? Think about the composition of the relative economic alternatives from a customer's perspective and how your assets stack up?
Yeah, Tracy, it's cam here. I'll maybe start out you know I I think um a couple points 1 point that we continue to reinforce is capital execution and and really why that's relevant is is you know we think that Capital execution from pem and aspect perspective is a strategic advantage of Advantage. We, we see ourselves uh on a on a dollar per unit basis of capacity whether it's in
To compete and continue to offer competitive fees, you know, I think the, you know, the advantage, uh, or or the, the dynamic is that, you know, all of our tolls, uh, are posted, uh, you know, on our website for, for our customers and our competitors to see, uh, you know, we, we don't have the same specific visibility there with our competitors. Uh, you know, I, I think, obviously, we, we get into conversations with our customers and are looking to provide the, the most efficient tools. But, uh, you know, from from our, from our experience, Contracting, you know, over the past 3 years, uh, you know, we have a sense that, uh, we are as equally competitive, uh, you know, and and obviously have the advantage of of being an incumbent at all the connectivity, uh, and capital that exists today to serve our customers. And ultimately we think that, you know, that gives us an advantage.
And just just for further to that. Good morning, it's Jarrett. I think, you know, we talked about cam talked a lot about Capital tools. Um you know, when you're moving a very large number of of physical barrels, our customers are very focused on operating costs. So our operating costs advertised over a large denominator obviously is is a bit of a competitive Advantage for pamina. Also, the Upstream connectivity when you're moving roughly, you know, when we got, you know, roughly a million barrels under contract, you have a lot of existing assets that are
Are already connected to to pause infrastructure and to, you know, obviously some assets are duly connected today and everyone knows that and then some assets are the proximity to alternatives are extremely close. Some of them aren't. Um, so the capital that's required. That's obviously, incremental capital from the customers to, to connect into those pipes. And then, when you think about Downstream connectivity we've been, you know, fairly public about this that our pipelines Connect into multiple condensate delivery points, multiple, uh, fractionators etc, etc. Um, and the Alternatives don't necessarily do that. So it doesn't provide the customers redundancy and as you think about LNG growing and that gas needing to flow every day to LNG. You need your liquids to be able to flow. So, the redundancy of having, um, you know, a a full Suite of Diversified pipelines, Like Pina has and then the redundancy that all of our pipelines, Connect into multiple receipt points in the, in the Edmonton of where Saskatchewan Market. It provides those
Customers that redundancy to make sure that gas can flow every day, you know. Um, and to keep obviously their cash flow streams going. Um, and then just the torque. We have on the size and scale of our infrastructure, you know, the optimization we can do um, with respect to adding a pump station and or, you know, um, just optimization through technology on pushing the limits of our assets can provide um, some pretty high margin and needed space for our customers.
Thank you for that detailed answer. Um, turning to the regulatory front. As Canada sits at an inflection point of reshaping, its energy strategy, maybe for decades to come and given that Pema has a front row seat here. Um, can you tell us about the progress? You're observing either at the federal or provincial level.
Yeah, I I would obviously the the words coming out of Ottawa and the provinces are generally uh, optimistic around Future Energy growth, you know, to to me 1 of the challenges that as an industry, we face is due to the Regulatory and political environment for the last decade. Um you know there hasn't necessarily been a significant amount of say Greenfield projects being engineered to go to the West Coast. So we're kind of starting from scratch. But I think what we're hearing from the government is relative support for industry to start to assess some of those those situations, you know. We continue to believe incremental LNG is going to be needed off the west coast and and that, that is a very logical, uh, outcome as it relates to the discussion around, crude oil pipelines. Um, you know, it's interesting to talk about a pipeline but if you still have an emissions cap and a tanker band, um, that that obviously is, is a huge impediment to a new oil pipe.
Line. So there's, there's certainly lots of things that need to be worked through. Um, but we are a positive in terms of of what we're hearing. And and what we're seeing in, in the reach outs to Industry, I just think it it's complicated and it's going to take some time to work through the system.
Thank you.
Thank you. And your next question comes from the line of probe Hope from Scotia Bank, please go ahead.
Morning everyone, just 1 for me, um, the mdna specifically referenced as a supply agreement for Bots for Dao is mutually binding. Um, how of the discussions on the supply agreement? Uh, changed, uh, just given a recent commentary from Dao and the delay there. And you know, is it the expectation that the agreement will come into effect regardless of when the crack Rector service?
Sorry. Robert did did you say B discussions?
Uh, the the discussion.
Oh, the discussion. Sorry. Um, you know, I think obviously we've been working very closely with Dao on that. And it obviously, they're, you know, they're, uh,
Analyzing the project. And, and ultimately, um, you know, sort of right sizing the spend profile. You know what I would say is that, um, you know, we have had a tour of our Redwater asset, uh, in July, uh, and I think the group there, you know, sort of would pass the work site. And, and I think, speaking for most of those people, they were very, uh, pleasantly surprised to see the amount of activity that was still ongoing at that site, uh, you know, not speaking for Dow, but it was clear that, uh, that there was a ton of activity still ongoing.
I think you're you're correct you know in the words chosen there's a a mutually binding uh Supply agreement there, uh that uh with a, an agreement on our part to sell and on their part to buy 50,000 barrels a day of ethane.
It's, it's pretty clear.
Thank you.
Thank you. And your next question comes from the line of Sanka Banerjee from UBS. Please go ahead.
Hi. Thank you for taking my question. This one is for me. Um, so number one, really, to power generation and Greenlight. Um, if you were looking at any other opportunities, would you like to do them? Um, more similar to a partnership as you would with Greenlight, or just more detail on potential future opportunities?
I'm, I'm sorry. Could you repeat the question? We had a hard time hearing, so we just didn't hear the first part of the question. I apologies.
Okay, all good. Um, yeah. So, um, just wanted to ask about potential future power generation opportunities. And if you'd follow a similar strategy with partnerships, such as Green Light, or any other details that you could provide.
Yeah, I think for for now we're not focused on future power opportunities. We're really happy uh, with our with our JV with kinetochore. Um, and really focused on getting uh, this this potential data center opportunity uh, up and build. You know, if we are successful. And we FID, we've talked about this being multiple phases and, and a significant amount of capital and therefore, you know, solely focused on this as it stands today. And just as a reminder, I mean, the, the rationale for this specific project was was obviously the integration with all of the other elements of our business, the location of it. The fact that it's based around our Fort Saskatchewan land position, the opportunity to enable a CO2 solution, the opportunity to enable uh gas egress on on both our processing business and and you know hopefully Alliance. So this was a really sort of hand and glove kind of opportunity for pemo which is why uh you know we we we thought it was interesting to
Pursue.
Got it. Thank you so much. I'll turn it over.
Thank you and your next question comes from the line of Bren Satish from mego. Please go ahead.
Thanks. Good morning. Um, I guess you kind of touched on this, but I just want to put a pin on it, I guess. So. Um, you know, as we Bridge from 2025 to 2026, Evita, uh, maybe if you can just, um, frame the moving pieces. So I guess on the, uh, you did give the guidance at the analyst day, but but we now have the alliance, uh, rate case maybe something on the US side. Uh, maybe marketing the Tad weaker, but then on the Tailwind, you've got a bunch of new projects, um, Mid single digit, volume growth. So I guess just kind of net net net putting that together. Um, should we expect Positive ebit, Dog, growth in 2026 or is 26 more flattish, and then the growth kind of resumes in 27.
That I think we're doing a tremendous amount of work and, and we do see visible growth opportunities, uh, you know, in the rest of the fee based business, uh, and the team, you know, I can tell you the focus of our team, uh, you know, really starting from, uh, you know, a few months ago, till now has been on, uh, opportunities for 2026 and, and adding value and, and and New Opportunities. So, you know, we feel we feel constructive about 2026, you know, the, the the marketing business will be with the marketing business will be in. I, I think, uh, you know, I would point that despite the fact that, you know, it is a a commodity exposed or commodity related business, you know, the history of that business has been confined to a relatively, you know, narrow range over time. I mean, uh, if you looked at the last 2 years on an Apples to Apples basis, uh, you know, there's probably a couple hundred million dollar range there, uh, you know, in in most years. So, um, you know, it'll be what it'll be and, and we can probably get more
pointed on that as we get closer to, to setting our guidance towards the end of this year. But would would point to the fact that, you know, we, we continue to reiterate our, our 4 to 6%, uh, fee, based debit dot per share guidance, um, through 2026 and, and our obviously working, uh, working hard on that.
Got it, that's helpful. Um, and then I know you kind of touched on this with the prior question on the piece phase 3 and phase 4 contracts that um, expire soon. But can you give any more clarity I guess on how much of that capacity has been Blended and extended you gave? The 7-year average duration. And I think you said that a lot of it has but maybe just can you get a little more granular? Um, have you recontract it over 50%. At this point just trying to get a sense there. I know it's a competitive process and then, um, tied to that, I guess on, on the Fox Creek to Nao expansion, are you looking to kind of blend and extend some more of those uh, Legacy contracts, with that expansion?
First part. Yeah, you know, I'd say first of all pretty, you know? I mean, you can obviously appreciate that. Is a, it's a competitive market out there. Um, you know, I think obviously we've been pretty transparent for a lot of years on our disclosure and uh, and so you know, the the fact that uh the weighted average life has extended from, you know, really from from 7 years. A couple years ago to 7 and a half today kind of you know just purely mathematically has to tell you that a meaningful portion of that has been recontract. I would also remind you that you know, contracts do not equal capacity. Uh you know that that those 2 are independent capacity, came over time and obviously a big uh, you know,
There was lots of contracts that came with phase 3, subsequent to that. There have been deep bottlenecks, and, and we've been adding, uh, contracts over time. So to, to the earlier points, we've continued to push, uh, to, to push the that recontracting out over time based on our service offering. Um,
And just and just to uh follow up on your last question on on Fox and Mayo specifically. Like, if you if you take a look back and you look and you break down the entire Suite of products that Pam and I have, we obviously um, you know, Scott referenced the million barrels, but that's broken out between crude C2, plus C3, plus, and C5 plus. And, and as you probably are, well, aware Penta has a segregated system of bringing those products into the Edmonton and Fort Saskatchewan market. So,
You know, with the increased demand and with, you know, obviously increased um, njls coming at the system as part of that, you know, single digit growth. Um, it's single digit growth that we're seeing here in western Canada, we're really seeing an uptick on the C3 plus volumes. And so the specific fox in the Mayo like you know, just if if I just looked into Northeast BC alone, you know, we've we've seen material recontracting. We've seen uh, we've been public about 3 large Monty producers and I think 1 of the things you need to look at is the producers that we have um, under contract that we've been public about, you know, of those 3, we've talked about conico and term.
Of our system, that's where we need to deploy the capital so that Capital there wouldn't be you know, a blend and extend. These are these are new contracts that our customers are taking to get their C3 plus into for Saskatchewan. And um so it wouldn't be like kind of a standalone project, it's in the need necessity of customers demand.
That's helpful. Thank you.
Thank you.
There are no further questions at this time. I will now hand the call back to Scott Burrows for any closing remarks.
Thank you, uh, for your time today. And as I said, previously, I hope everybody has a, a great summer. Thanks everyone.
This concludes today's call. Thank you for participating. You may all disconnect.