Pembina Proceeds with Nipisi and Mitsue Pipeline Construction

Pembina Proceeds with Nipisi and Mitsue Pipeline Construction

Wednesday, August 13th 2008

Pembina Pipeline Income Fund announced that its wholly owned subsidiary Pembina Pipeline Corporation is proceeding with the construction of two pipeline systems with an estimated combined capital cost of $400 million. Pembina has entered into transportation service agreements (“TSAs”) with founding customers, Canadian Natural Resources and EnCana Corporation (the “Shippers”) on these two pipeline systems, providing for committed revenue streams for an initial 10-year term from the in-service date, with extension rights.

The first pipeline (the “Nipisi Pipeline”) will consist of a combination of newly constructed and existing 16 inch and 20 inch pipe and will provide 100,000 bpd of blended heavy oil transportation service for product received at Utikuma, Alberta and delivered to Edmonton, Alberta. The Nipisi Pipeline will use existing pipeline capacity between Judy Creek, Alberta and Edmonton, Alberta.

The second pipeline (the “Mitsue Pipeline”) will consist of a combination of newly constructed and existing 6 inch and 8 inch pipe and will provide 22,000 barrels per day (“bpd”) of condensate transportation service for product received at Whitecourt, Alberta and delivered to Utikuma, Alberta for use as a diluent for heavy oil. The receipt point of the Mitsue Pipeline is connected to Pembina’s existing Peace pipeline system at Whitecourt.

Pembina, through its subsidiary Pembina Marketing Ltd., has contracted for a portion of the pipeline capacity on both the Mitsue and the Nipisi Pipelines and plans to construct a truck terminal and trim blending facility, the Utikuma Terminal, to facilitate truck area receipts.

All the facilities contemplated are expected to be in service in mid-2011 and are each expandable by approximately 50% of their current capacity, primarily through the addition of pump stations.

Pembina will commence public consultation immediately seeking feedback on the proposed pipeline routing, traditional land use, environmental impacts and other aspects of the project. Information gathered through this process will be incorporated into project planning. Further, Pembina intends to work with communities potentially impacted by the project to explore employment and business opportunities associated with the construction, operation and ongoing maintenance of the two pipelines and related facilities.

Bob Michaleski, President and CEO of Pembina commented: “This project represents another exciting step forward in the execution of our long range development strategy. I believe the Nipisi and Mitsue Pipelines, by virtue of their design, offer significant benefits to project stakeholders. Utilization of under and un-utilized infrastructure reduces our operating footprint and minimizes the impacts on communities, land and the environment. The use of existing assets allows Pembina to offer customers dedicated service at attractive commercial terms with lower project completion and execution risk. The returns generated by this new service are expected to deliver value to Unitholders in the form of a stable, long-term cash flow stream commencing in mid-2011.”

The Shippers have contracted for dedicated capacity totaling 80% of available capacity on the Nipisi Pipeline and 50% on the Mitsue Pipeline. Pembina Marketing Ltd. has contracted for the balance of available capacity on these pipelines. The agreements provide Pembina with a fixed capital return and allow for the full recovery of operating costs over the term of the agreement. Based on Pembina’s internal projections, the two pipelines are estimated to contribute approximately $45 million in initial net operating income per annum once operations commence.

Pembina’s Mick Dilger, Vice President of Business Development stated: “The Nipisi Project is representative of the ongoing optimization and build-out of our existing asset portfolio, a strategy that has allowed us to achieve attractive project and Unitholder returns while offering competitively priced services to our customers.”

Pembina Pipeline Income Fund is among the leading issuers in the Canadian energy infrastructure trust sector. Pembina’s extensive network of conventional liquids feeder pipelines, and growing presence in the oil sands, heavy oil and midstream sectors, provide an integral service to the western Canadian energy industry. This balanced portfolio of premium, long-life energy infrastructure assets supports the stability and sustainability of the Fund. Information on the Pembina Pipeline Income Fund is available on Pembina’s website at

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