Pembina Pipeline - Earnings Call - Q2 2025

Transcript

Speaker 1

Good morning ladies and gentlemen and welcome to the Pembina Pipeline Corporation Q2 2025 results conference call. At this time all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Friday, August 8, 2025, and I would now like to turn the conference over to Dan Tucunel, Vice President, Capital Markets. Thank you. Please go ahead.

Speaker 0

Thank you, Ina. Good morning, everyone. Welcome to Pembina's conference call and webcast to review highlights from the second quarter of 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. I would like to remind you that comments made today may be forward-looking in nature and are based on Pembina's current expectations, estimates, and judgments. 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.

To learn more about these forward-looking statements and non-GAAP measures, please see the Company's Management's Discussion and Analysis dated August 7, 2025, for the period ended June 30, 2025, as well as the press release Pembina and I issued yesterday. All of these materials are available online at pembina.com and on both SEDAR+ and EDGAR. I will now turn things over to Scott.

Speaker 2

Thanks Dan. Yesterday we reported our second quarter results, which were highlighted by quarterly adjusted EBITDA of $1.013 billion. We remain on track to deliver full year results within our original 2025 adjusted EBITDA guidance range, but as Cam 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. On the project front, Pembina continues to demonstrate its ability to deliver capital projects that provide strong returns and a competitive 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. We recently celebrated the achievement 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.

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. The RFS4 project continues to progress towards an in-service date in the first half of 2026. Pembina is pleased the project is trending approximately 5% under the previous cost estimate with a revised expected total cost of approximately $500 million. On a cost per barrel of capacity basis, Pembina is on track to deliver its expansion 15% to 20% lower than competing projects currently underway, highlighting Pembina's advantaged service offering.

Looking beyond 2025, strong business fundamentals continue to reinforce our outlook for low to mid single-digit annual volume growth through the end of the decade across all WCSB products. The outlook is supported by the strong economics and long inventory lives of the Montney 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.

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 of midstream and transportation services across all commodities, 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. 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 release yesterday.

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 AltaGas for 30,000 barrels per day of LPG export capacity and the current RIPET and future REEF facilities. 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. 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 netbacks for Pembina and its customers.

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. PGI recently acquired from Whitecap the remaining 8.3% interest in three gas plants and a sales gas pipeline from PGI's Duvernay Complex. Concurrently, 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. PGI has also entered into an agreement with a Montney producer to fund and acquire an under-construction battery and additional infrastructure in the Wapiti North Gold Creek Montney area. 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. 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. These expansions include the Taylor-to-Gordondale project, which will be a new pipeline connecting mostly condensate volumes from Taylor, British Columbia to the Gordondale area, the Fox Creek-to-Namao expansion, which is a proposed expansion of the Peace Pipeline system that, through the addition of new pump stations, would add approximately 70,000 bpd of propane-plus capacity to the market. Delivery points from Fox Creek, Alberta to Namao, Alberta, and other expansions to support volume growth in Northeast B.C., including new pipelines and terminal upgrades.

The growth is secured by long-term contracts underpinned by take-or-pay agreements, areas of dedication across the Montney and Duvernay formations, and other long-term agreements that ensure a strong base of committed volumes. Final investment decisions on the Fox Creek-to-Namao expansion and the Taylor-to-Gordondale project are now expected by the end of 2025 and the first quarter of 2026, respectively. These fully supported, demand-driven pipeline expansion opportunities, along with the success we continue to have in recontracting legacy volumes, are taking place. Against the backdrop of increased competition, we remain confident in our ability to continue to grow volumes across our conventional pipeline system. Our Northeast B.C. and Northern pipelines provide a full product integration across all commodities and connectivity both upstream and downstream. Combined with our marketing and export capabilities, 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. 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. Building upon its position as the leading supplier of ethane to a growing Alberta petrochemical industry, Pembina continues to work closely with Dow Chemical Canada. We are evaluating the various options available to meet our commitment under the mutually binding 50,000 bpd ethane supply agreement. Most notably, engineering and commercial discussions are ongoing related to the addition of a de-ethanization tower at RFS4 within the Redwater Complex and a final investment decision is now anticipated by the end of 2025.

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 Connecticore, is developing an up to 1,800 megawatt gas-fired combined cycle power generation facility and is in active discussions with a data center customer to commercially underpin the project. 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. In addition to the opportunity to invest in long-term contracted power infrastructure with an investment grade counterparty, Pembina is well positioned to leverage its existing and future value chain to further support this project. 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.

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. I will now turn things over to Cam to discuss in more detail the financial highlights of the second quarter.

Speaker 0

Thanks Scott. As Scott noted, Pembina reported second quarter adjusted EBITDA of $1.013 billion. This represents a 7% decrease over the same period in the prior year in pipelines. Factors impacting the quarter primarily included lower firm tolls on the Cochin pipeline due to recontracting 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 8 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 Nipissy pipeline.

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. 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 Aux Sable, and finally lower realized gains on crude oil based derivatives partially offset by lower realized losses on NGL based derivatives.

Finally, in the corporate segment, second quarter results were higher than the prior period due to lower incentive costs driven by a change in Pembina share price in the period compared to the second quarter of 2024. Earnings in the second quarter were $417 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.

White Cap lower other income due to no similar gain to that recognized in the second quarter of 2024 related to Pembina's financial assurances soon 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. 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 Nipisi pipeline and Peace pipeline system and lower volumes at PGI, Redwater, and Aux Sable due to planned outages.

Turning to the full year, as Scott mentioned, we updated our 2025 adjusted EBITDA guidance range to $4.225 billion to $4.425 billion 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 the fourth quarter. 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. 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. 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. 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 the Duvernay Complex due to higher second half volumes. 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.

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. 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. I'll now turn things back to Scott.

Speaker 2

Thanks, Cam. In closing, we remain focused on delivering value to our investors by best serving our customers, 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, finalizing our Cedar LNG Project 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. Thank you for joining us this morning, enjoy the rest of summer, and we look forward to meeting with you in person or speaking to you soon. Please go ahead and open up the line for questions.

Speaker 1

Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press Star 4 followed by the 1 on your telephone keypad. You will hear a prompt that your hand has been raised. Should you wish to cancel your request, please press Star 4 followed by 2. If you are using a speakerphone, just lift the handset before pressing any keys. One moment, please, for your first question. Thank you. Your first question comes from the line of Aaron MacNeil from BMO Capital Markets. Please go ahead.

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 receiving. There's sort of this, I don't know.

Speaker 2

What I guess I would call it.

A death by a thousand cuts narrative out there. If I were to sum it up as a theme, it's really just about different ways where Pembina's incumbency in.

Speaker 0

The Canadian NGL value chain is being challenged.

The theme covers a lot of ground in several specific points. I can appreciate that it's difficult to touch on every one. How do you respond to that criticism? What do you think it misses, if anything? What do you see as the sort of unique value proposition for investors going forward?

Speaker 2

Thanks, Aaron. It's Scott here. There are a few things I think that we need to, I guess, level set or unpack on that question. I'll try to address it at a high level versus kind of going through every specific point. To me, there's a difference between fundamentals and temporary noise. When you have kind of the extensive franchise that we have in the Canadian midstream space, I'd say the bar is very high. There's always going to be something to pick at. When I step back and get out of the noise and kind of look across the horizon at the 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. When you think about the resource in the Montney, it's unbelievable.

The basin is growing and it's full of visible catalysts, whether it's gas egress through LNG, new LNG exports, Tidewater egress for oil, and new avenues to create value for customers, hydrocarbons, whether that's incremental petrochemical demand or incremental gas to power. There's a lot of visible catalysts that we see coming at the basin. When I think about Pembina specifically, I think we're the only franchise that directly benefits and is involved in all of these catalysts. If you think 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 we talked about, there's local Alberta demand, East Coast Sarnia access, and cost-effective unit trains across the U.S. We really have an unparalleled marketing basis when it comes to LPG. We hit all markets.

We have a significant and growing condensate franchise supporting the oil sands growth, which we continue to see growing with the bottlenecks across the system. We're currently providing gas egress in a constrained environment with access to high value markets in the mid-continent in alignment with long-term shippers. We're supporting the standup of a world-scale cracker both through feedstock supply and ancillary midstream services. We're continuing to look to extend our value chain and lead the way for our stakeholders and customers. We evolved the midstream sector in the early part of the last decade, building the integrated value chain which is the core of our franchise today. 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 eight to ten years ago.

We're trying to go to where the ball's 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 in the core business. I think a realized proof point of that is the $1 billion of visible capital deployment that we talked about for Peace capacity today. In a growing basin, we and others are competing to provide value-added services to our producer clients. On that basis, we are confident in the resilience of our performance. We're not going to win every barrel, we know that, but we do believe we're going to win our fair share. The noise, as you mentioned, or death by a thousand cuts, can be a distraction from what's important.

In my mind, long-term excellence and execution is what's important. I believe that we have an unparalleled track record in the NGL midstream space. Hopefully that answers your question. Happy to take any follow-on. 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 outlined all the growth opportunities last quarter. I think Cam mentioned the potential for a buyback. It seems as though maybe the narrative is shifting more to a growth orientation. Maybe you can sort of just.

Speaker 0

Give us a sense of your latest.

Thinking around capital allocation.

Sure.

Speaker 2

Maybe just to address part of the question, 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 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 of incremental capital. Should we advance some of our projects? That's really what this is tied to. We're advancing projects. I think what's lost in that mix, and I just want to point out, is that is offset by capital savings across our projects as we continue to execute our project. 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 and is actually offset by cost savings across many of our projects.

Aaron, it's Jared here too. Just kind of getting back to your original question. You were talking about, you know, some of the noise and, you know, maybe misconceptions. I think last week one of Western Canada's largest producers came out and talked about some substantial growth terminally and talked about growing their overall production by 200,000 boe a day in the next kind of six years. We view that as extremely positive and I think all midstreamers should view that as extremely positive. The investment that that organization's making in Western Canada and the quality of their reserves, there was some, you know, we obviously got some inbounds with respect to margin erosion, etc., with respect to some of their announcements.

That's where I think that clarity is required, as they talked about a dollar per boe that could be captured, but it required them to get to 850,000 boe a day. They also talked about how that value creation is split between operating costs, which I have to think is in their camp. They're doing something different to save OpEx. They talked about 50% of that being transportation value creation. That transportation was represented in a boe basis, so barrels of oil equivalent, not just straight up liquids. We only move Tourmaline's liquids today. That could be gas egress value creation, that could be rail value creation, that could be trucking, that could be liquids, pipelines, etc. I just wanted to chat about that. Overall, I would say as customers in Western Canada grow physical barrels, typically their dollar per unit does go down. That's not uncommon.

Specifically, our Northeast B.C. Pipeline, which they are a customer on, that's a cost of service pipeline. As volumes go up, tolls go down just like any other cost of service pipeline in North America. Lastly, what I think a lot of our listeners probably don't know, in 2022 we announced a fairly large commitment with Tourmaline for a chunk of their Northeast B.C. development and that long-term deal for pipe and frac. Those tolls don't change. Those are fixed tolls that we offer the customer and we take pride in giving fixed tolls and providing highly reliable service. I just wanted, you know, that's some of the noise that I think requires a little bit of clarity. Overall, we're extremely excited about one of Western Canada's customers growing by 200,000 boe a day in the next couple of years. Just to provide some color.

Speaker 0

Maybe I'll just close it out on your question on capital allocation, Aaron. I mean, listen, I think we've been pretty consistent for some time in terms of our approach to buybacks, looking at the relative adjusted economics. Obviously, we've been continuing to do that. We've talked about our free cash flow profile over the next couple of years, likely staring at a modest amount of free cash flow in 2025 and likely flattish to perhaps offsetting that in 2026 based on the period of the Cedar spend 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 and we'll do that and, sort of without signaling our intention either way here today, obviously it's something that we talk about every week.

All right, thanks everyone. Turn it over.

Speaker 1

Thank you. Your next question comes from the line of Maurice Choy from RBC Capital Markets. Please go ahead.

Speaker 2

Thank you, and good morning everyone.

Speaker 0

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? Is it about starting with the low to mid single-digit volume growth through.

The end of the decade, and then you add on incremental CapEx-driven growth. Just your thoughts on that?

Speaker 2

Yeah, thanks for the question, Marita. I think, you know, from a guidance perspective, at our last investor day we provided our guidance out towards 2026, and that's the extent of our guidance at this stage. As we move to the end of 2025 and into 2026, we will look to refresh that guidance going forward. I'm not prepared to give you a multi-year EBITDA guidance outside of what we've already publicly disclosed, but from a volumetric perspective, as we mentioned in our prepared remarks and in what you've heard from us before, we continue to see somewhere in the neighborhood of mid to high single digit growth in volumes across the basin, mainly driven by the catalyst that we talked about previously. No real change from what we've talked about previously.

Speaker 0

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. If you look at history just as one proxy and you look at, you can look across our business but just focusing on the conventional for a moment because that's what we often talk about as a proxy, go back 5 years and actually our growth in that business and the growth in our business overall was always through a combination of volume growth but also margin, and margin comes from a number of pieces. Obviously, we have some contractual elements to that. We do that through operational excellence and reducing our own cost structure. As much or more of the growth came from that piece.

I think as we think about the future, I think we actually see really constructive volume growth as we look out over the next 5 years, perhaps even stronger than we've seen in the last 5 depending on product and obviously egress restrictions. Obviously, we're continuing to do the hard work internally to continue to make our service offering more, more competitive, more, more accretive and obviously continue to be able to generate value through margin as well. I would say that partly underpins our view on the long term outlook.

Just to quickly follow up on that, you said the volume growth is really constructive and stronger than you've seen in the last five years.

You also said generate value through margin sustainability.

Are you seeing margin as being one?

Where you can maintain margins or do.

You think that margin growth can also potentially come given the competitive landscape?

Yeah, I think there's two areas to answer that question. One is obviously in the past couple of years we've had a couple sort of meaningful toll resets on some cross border assets, namely Cochin and Alliance. Obviously that has been a headwind on the margin side. Tough to get away from that. I think in the rest of the business, conventional business, our gas processing business, our frac business, we've done a lot of really solid things and continue to do things. For example, our Prince Rupert announcement yesterday in terms of medium gas carriers, that's a margin enhancement activity right there. We're looking for ways, our team is really focused on doing that. I think obviously that the business is evolving. Obviously competition is greater than it's ever been.

I think as Scott said in his introductory comments, we continue to believe that we have the very best franchise across the board. That gives us an advantage in terms of maintaining and frankly growing that margin. Understood.

If I could just finish off with a comment you made on the press release about evaluating further expansion to support volume growth in Northeast B.C. I know you have the Taylor-to-Gordondale pipeline project out there right now, but.

Speaker 2

Just curious, some of your thoughts about.

Speaker 0

The long-term competitiveness of Fort CESC.

Facilities versus the existing or new ones in Northeast B.C., particularly given how some of the propane, butane incrementally setting out.

Out west for export.

Maurice, Jaret here. Yeah, great question. First off, the competitiveness of Fort Saskatchewan in totality, not just Pembina's frac, I say is still very attractive. The reason why I say that is that the majority of the NGLs that come into Fort Saskatchewan today, regardless if it's Dow, Pembina, Keyera, Plains, etc., they're all coming from downstream of North Pine. There's kind of like an imaginary line where products want to come into Fort Saskatchewan, and a significant amount of those are coming from Alberta. A very large amount of the NGL is coming from Alberta. You also need to look at the diversity in the rail connectivity. There's obviously going to be opportunities at a significantly smaller scale. If you looked at all the C3+ capacity in Fort Saskatchewan compared to North Pine 1, 2, or 3 even, they don't even compare in size and scale.

Rail connectivity, inlet storage caverns, etc., there's a lot of efficiencies coming into Fort Saskatchewan. Further to that, the Northeast B.C. brac, you're going to be dedicated solely to the West Coast. Short-term fade arbitrage is, you know, they look extremely good and we believe long term they're going to be good. 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 Belvieu and meeting that diversified North American market while having access to the West Coast market. Are there going to be opportunities to build smaller scale bracs in certain areas? Absolutely there is, if you're close to rail and those types of things.

If you want to do it at a massive scale and provide that redundancy and that optionality for diversity, I think customers are going to continue to come to the Fort like they have been for a really long time. I'm not saying that there's not small niche opportunities, Maurice.

Cam, I'll just pile on one last thing. I think to complement what Jaret said, the analogy would be other products. Whether it's the natural gas value chain or the oil value chain, obviously there's been export market opportunities in both of those and customers have long chosen to diversify their market egress options for a number of reasons. One of those is obviously market arbs; premium markets do ebb and flow. There are operational redundancy reasons for that. I think that's what we really like about our offering. Obviously, the export piece, complemented by the announcements that we made yesterday and the week before, absolutely enhanced that. We also really like the other pieces of our portfolio and think it's an incredibly, frankly, one that no one else has.

Thank you very much for that.

Speaker 1

Thank you. Your next question comes from the line of Robert Catellier from CIBC Capital Markets. Please go ahead.

Speaker 0

Hey, good morning and thanks for the.

Fulsome discussion so far. I want to touch on that last point that you made, Cam, about other products.

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 2

Hey Rob, I think for us, if we back up and look at the fundamentals in the macro, there is a significant amount of ethane, not just Pembina but across the basin being produced and quite frankly reinjected in the WCSB. The amount of ethane available here could lead to various options, whether it's further petrochemical investments within the province or other opportunities. 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. We do not believe as of right now there's a scalable amount of ethane, call it in Northeast B.C., to support a pipeline because this would need to be pipelined to the West Coast and the economics just aren't there yet. We do believe that it's an opportunity in the future, but right now the economics of it look challenged.

Okay, what are your thoughts?

Speaker 0

On how the competitive landscape changes if KKR completes the Plains NGL acquisition as envisioned?

Speaker 2

Yeah, you know, from our perspective, those assets exist today. They exist in play, in a very competent and, you know, very fierce competitor. From our perspective, not a lot changes in terms of assets that exist today. Capacity exists today. They were owned by a formidable competitor and they're going into a formidable competitor's hand. It's kind of business as usual for us.

Speaker 0

Okay, 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. Hey Rob, it's Cam here. I'll take that. What I would say is that the frac spread hedge book is substantially on.

Excuse me.

The marketing plan is substantially on plan. If you look at where we are on the NGL side, it's tracking very close to budget. If you look at propane prices and gas prices, they kind of bounced around. 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, which has obviously been net positive for Alliance and obviously a bit of a headwind for our NGL stable, but sort of net net. I think what we have observed is that the crude oil complex has clearly been highly variable. We're likely seeing somewhat more modest storage opportunities, albeit recognizing that that's a relatively small piece of the marketing book. If you take my comments and the guidance and the guidance update together, we're sort of talking at the margin.

Differentials have obviously been a little bit narrower than they were in the fall. All those pieces together, I'd say we're close to where we were, maybe just slightly, slightly lower than budget time. Clearly, I think what we do see as tailwinds is I think if you went back three, six months, we were looking at a stronger eco strip as we got into the fourth quarter of this year. Obviously, we've observed that as months have tipped by here, even following the startup of LNG Canada, there's still quite a bit of storage to work through on the Canadian gas side. That strength has been pushed out, and that is obviously in the near term supportive of our NGL business.

As far as the 2026 outlook for hedges, you'll remember that about two or three years ago, we went to a more dynamic hedging strategy which effectively involved looking at our own market knowledge, looking at the probabilistic outlook of where the business was, and right setting our hedge levels based on that. As we sit looking at 2026 at the moment, we're relatively modestly hedged because we see the P levels at or slightly below a P50 level. From that perspective, we do see some constructiveness coming, I think, particularly as I mentioned, in the N gas space. 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. Okay, thanks for that update.

Speaker 1

Thank you. Your next question comes from the line of Benjamin Pham from BMO Capital Markets. Please go ahead.

Hi. Thanks. Good morning. First question on Cedar LNG Project. Do you talk about your progress on the remarketing? It sounded like there was a qualitative positive tone on it early this year in terms of solidifying something to share progress going forward. Is it more over-subscription versus the capacity? Is it more narrow in terms of the conversations there?

Speaker 0

Ben, it's Stu.

Yeah.

The remarketing of our capacity, you know, we're very pleased with the progress that we've made to date. We've engaged in multiple counterparties, and through that process, we have continued to refine our discussions. We are exchanging agreements with counterparties at this point in time 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 the capacity portion of it and are open to and considering selling the entire 1.5 MTPA. Those conversations have begun and are part of what we expect to close at this point in time. There remains tremendous interest in the capacity, and it's just the effort and details to get through some very large and complex discussions and agreements as we go forward.

We remain optimistic that we're going to arrive at something that works for us and for our customer.

Okay, got it. Maybe I switch over to the piece. You referenced a seven year average contract length and I just wanted to clarify because I was thinking you go back, you got price and expansions 10 years ago you put in with 10 year take-or-pay contracts. Can you clarify? Those contracts are probably expiring this year or next, you effectively have extended those contracts that there's no expiration that you're dealing with or renegotiating. Morning Ben. Jaret here. You absolutely nailed it. Scott mentioned we had about a million barrels on the total Peace Northern system on the conventional system at about seven and a half years. A lot of those contract roll offs have been extended with incremental barrels with our customers.

Ben, just as a reminder, I was just going to say that's been a multi-year thing going all the way back, you know, frankly to 2019, 2020 when we started talking about areas of dedication and extensions through that, some of the extensions we've done over the past three or four years. It's been an ongoing and regular process each year.

Speaker 2

Yeah, understand. I'm just looking backwards. You've done it, it's all all put together now for me.

May I add one last thing, some early.

Questions around some of the commentary.

On your stock and sentiment, your stock's down $10 or so over a short period of time. At what point do you actually start to maybe just push down growth CapEx and buy that stock instead?

Ben, I think as we think about this year's capital program and next year's capital program, they're largely committed in terms of advancing FID projects like Cedar. A vast majority of next year's capital is Cedar capital as well as pipeline capital. We've signed agreements that require us to build and expand the pipeline. The majority of the capital is committed towards FID projects. Buying back stock versus growth capital is always a constant debate amongst our team here and with our board. Right now, as we've talked about, capital dedicated to projects and the projects we are considering generally enhance our franchise. Buying back stock is a nice economic outcome, but it doesn't necessarily enhance your franchise and enhance the service offerings that you can provide to your customers. It's always a balance. Of course, as stock prices go down, it increases the discussion as it relates to buybacks.

Right now, for this year and next year, the capital program is essentially locked down for existing projects.

Okay, got it. Thank you.

Speaker 1

Thank you. Your next question comes from the line of Jeremy Bryan Tonet from JPMorgan Chase & Co. Please go ahead.

Speaker 0

Hi, good morning.

Speaker 2

Hey Jeremy.

I just wanted to pick up with.

The AltaGas agreement there.

I was wondering if you might be able to expand a bit more on the go forward, I guess, LPG export strategy and do you see kind of, you know, more partnerships going forward versus growth projects to expand your capabilities. I'm just wondering if you could talk a little bit more there on the thought process and what we could expect going forward.

I think for now we're happy with the two announcements that we made today. Obviously, the AltaGas 30,000 bpd incremental contract and the investment in our own facility to optimize for us right now, I think getting the MGCs up and running and advancing that project is a big focus. Like any asset, we will continue to look to optimize that facility. As Cam pointed out earlier, the MGCs are an optimization of that facility. As we get closer to in-service of that, we will again look to optimize that, whether it's continuing to lower the cost of that or potentially optimizing shipping and rail, which could increase capacity. Optimizations remain key and then augmented with our AltaGas agreement. We're pretty satisfied now. That being said, if you listen to our comments around volume growth and pipeline growth, we continue to see growth in the NGL space.

As those NGL volumes grow towards the end of the decade, we will continue to assess where the optimal market is for those barrels. As Jaret pointed out, it's always good to have optionality in any product, in any marketing, because while ARBs are open right now, we know that ARBs aren't always open. We will look to continue to build out our assets in Fort Saskatchewan. As we secure more barrels, we will look to where the optimal markets are, and that could be further barrels off the west coast or it could be to other markets, depending on the time and where the markets are open at that time.

Got it. That's helpful. Thank you. I just want to pivot towards Project.

Speaker 0

Greenlight if I could.

It sounds like there's good, I guess, 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 when FID could be possible. Yeah, thanks. It's Stu again.

Yes, as you stated, I think we've made tremendous progress on the Greenlight Electricity Center project with our partner, Connecticore. We worked hard as a team and a group to successfully advance through phase one of the ASO allocation process. With subsequent commercial efforts, the project was able to sufficiently secure a megawatt allocation that will allow you to have a viable scale that the project can move forward. That was very exciting for us. That allocation of megawatts off the grid is a stopgap measure until we can get our facility built, the power generation facility. We're taking all the steps necessary to progress all of the elements such that our project could be in service in 2029. We're very excited about that. We're working with, commercially working with the off taker of that power. They would be in service.

The data center itself would be in service in 2027, consuming that grid power that I just talked about and then switching over to the generated power from our site. We're having very good conversations commercially and are expecting to further those through the remaining part of 2025 and are excited about the progress that's been made.

Jeremy, I'll just maybe add that with our Alliance press release there late in July with the settlement, we also talked about the expression of interest to expand Alliance, that interprovincial short haul, and the interest there that would obviously feed a lot of the gas that would go into Project Greenlight. The interest there is extremely high. Yeah, it's all coming together. Got it.

Thanks for that.

Just the last one, if I could with regards to Cedar, if you could provide maybe a little bit more color with regards to commercial discussions there as we approach in-service, how I guess that impacts the tone of those conversations.

Speaker 2

Yeah, I think from where we were a year ago, you know we are FID, which is obviously a key milestone. We're a year closer to in-service and the project's real. I mean, as I talked about with the steel cutting, that has happened. We were up in Kitimat last week and the progress along the terminal and the right of ways is tremendous. That's garnered real interest from multiple counterparties, which has led to a broader process. As Stu mentioned, we've seen significant interest and we're very optimistic about getting these deals done here in the next quarter or two.

Got it. Sounds great. Thank you.

Speaker 1

Thank you. Your next question comes from the line of Patrick Kenny from National Bank Financial. Please go ahead.

Thank you. Good morning.

Speaker 0

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 what the opportunity set looks like. What else you're seeing out there in terms of low-hanging fruit, consolidation, or investment opportunities that you could add to the portfolio. What type of assets or resource plays across the basin look most interesting. 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. Morning Pat. Yeah, so obviously when we created PGI there was obviously some extreme like having KKR as a partner, and they've been a great partner. It's been a tremendous outcome. That business has grown tremendously and it continues, seems like, quarter over quarter. Chris and his team are pumping out new integrated deals feeding terminus value chain. You know, their strategy really is to focus on, number one, high quality resource. You know, focus on liquid rich resource that's going to feed the Peace Pipeline and into, you know, the fractionation complex, etc. Focused obviously on customers who typically don't build their own processing infrastructure and batteries and those types of things. There's a lot of opportunities out there. Some recent acquisitions, some lands have changed hands and those types of things.

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 work at K3 right now. Wapiti expansion. We did a small expansion at our Hythe complex, like, so there's a lot of brownfield opportunities, specifically in the sour gas space. That's obviously where Western Canada is ultimately constrained, is sour gas processing. We have a lot of it, a big portfolio of it, and extensive pipelines that interconnect a lot of that. Those are kind of the brownfield, greenfield short opportunities with respect to, you know, targets or acquisitions. Can't really speak to that. Obviously, I'd have to have KKR's backing to speak to anything like that. We're always looking, like we are here at Pembina. If the right opportunity presents itself, we will, we'll be on it.

Maybe I'll let Cam talk to the financing.

Hey, Pat, just with respect to funding capacity, I think obviously what we've seen is that JV has been funded with a very supportive bank credit market to date and consistent contributions from both of the partners. I would say that we've got some existing liquidity under the existing arrangements to the tune of a few hundred million dollars on the existing credit stack. We've also got an accordion facility there which could provide another few hundred million dollars on top of that. Obviously, there's always other opportunities to look at various markets. I don't see funding capacity being a constraint for PGI in the near term. Clearly, I think that JV has done exactly what it was intended to do and the performance from it has been very solid across the board, so continue to have strong access to capital to execute the strategy.

I guess, zooming out on a consolidated basis, 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 potential projects that are still in the queue, Cam, if you had a sense as to what your internal funding capacity might look like coming out of 2025 based on now that you've earned 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. Great question, Pat. First of all, reminder that we've been pretty clear and pretty consistent over time around our target leverage and our financial theory or our financial orientation, which has always been around a strong triple B rating and ultimately looking at targeted proportionally consolidated debt to EBITDA kind of in that at 3.5 to 4 times.

Obviously, we've had the official range kind of up to 4.25 and that's really meant to capture, frankly, situations that we're in right now. What I speak to when I say that is, obviously, we're in the middle of a four-year build project with Cedar LNG and something that is accruing debt each year but with no positive EBITDA contribution until late 2028. That shows up in the leverage metrics. It'd be wrong to disregard that entirely. As you'd see, our leverage metrics sort of notch up a little bit into 2026. It's really as a function of that. If you start to back that out, we're really comfortable in the leverage range of where we are and really square within that target range.

As for what the funding looks like, I would say, obviously, I mentioned earlier that we've got a bit of cash flow this year, modest amount based on our current forecast. Next year, we probably are slightly the other way. We're probably modestly in a deficit position, but on a multi-year basis, I think we are free cash flow neutral to slightly positive based on our three-year range that we disclosed back at Investor Day last year. That continues to afford us a strong position, I think, as we've talked about, and the ability to sort of still seize opportunities if and when they come about because of our strong financial position. Okay, that's great. Cam and Jaret, appreciate the color on PGI. Thanks.

Speaker 1

Thank you. Your next question comes from the line of Theresa Chen from Barclays. Please go ahead. Thank you. As a follow-up to the discussion of the competitive dynamics earlier, given that it does seem to be intensifying, whether.

That be from traditional midstream players or.

Speaker 2

Your customers taking some of these midstream.

Activities in-house, in addition to the.

Speaker 1

Level of contracting that you have across your portfolio and the 7.5-year average duration comment, setting your.

Speaker 2

Fees compared to alternative options, whether that be the competing pipeline system across your footprint or different mode of transportation to the B.C. west coast for export, can you help?

Speaker 1

Us think about the composition of the.

Speaker 2

Relative economic alternatives from a customer's perspective.

How do your assets stack up?

Speaker 0

Yeah, I'll maybe start out. I think a couple points. One point that we continue to reinforce is capital execution. Really why that's relevant is we think that capital execution from Pembina perspective is a strategic advantage. We see ourselves on a dollar per unit basis of capacity, whether it's in the pipeline or the frac sector, being more competitive than our direct competitor. We obviously gave up a stat on the frac space that's really observable. We've looked at other stats or comparable pipeline projects and believe the same sort of directional magnitude is also true. We sit there and look out and say, over the long term, we're in a very strong position to be able to compete and continue to offer competitive fees.

I think the advantage or the dynamic is that all of our tools are posted on our website for our customers and our competitors to see. We don't have the same specific visibility there with our competitors. I think obviously we get into conversations with our customers and are looking to provide the most efficient tools. From our experience contracting over the past three years, we have a sense that we are as equally competitive and obviously have the advantage of being an incumbent and all the connectivity and capital that exists today to serve our customers. Ultimately, we think that gives us an advantage.

Further to that, good morning, it's Garrett. I think, you know, we talked about, Cam talked a lot about capital tools. When you're moving a very large number of physical barrels, our customers are very focused on operating costs. Our operating costs amortized over a large denominator obviously is a bit of a competitive advantage for Pembina. Also, the upstream connectivity, when you're moving roughly, you know, when we got roughly a million barrels under contract, you have a lot of existing assets that are already connected to Pembina's infrastructure and to, you know, obviously some assets are duly connected today, and everyone knows that. Some assets are, the proximity to alternatives are extremely close. Some of them aren't. The capital that's required, that's obviously incremental capital from the customers to connect into those pipes.

When you think about downstream connectivity, we've been fairly public about this, that our pipelines connect into multiple condensate delivery points, multiple fractionators, et cetera. The alternatives don't necessarily do that, so it doesn't provide the customers redundancy. 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. The redundancy of having a full suite of diversified pipelines like Pembina has, and then the redundancy that all of our pipelines connect into multiple receipt points in the Edmonton and Port Saskatchewan market, provides those customers that redundancy to make sure that gas can flow every day and to keep obviously their cash flow streams going.

The torque we have on the size and scale of our infrastructure, the optimization we can do with respect to adding a pump station and, or just optimization through technology on pushing the limits of our assets, can provide some pretty high margin and needed space for our customers.

Speaker 1

Thank you for that detailed answer. Turning to the regulatory front, as Canada sits at an inflection point of reshaping.

Speaker 2

Its energy strategy maybe for decades too.

Speaker 1

Given that Pembina has a front row seat here, can you tell.

Speaker 2

Us about the progress you're observing either at the federal or provincial levels?

Yeah, I would.

Obviously, the words coming out of Ottawa and the provinces are generally optimistic around future energy growth. One of the challenges that as an industry we face is due to the regulatory and political environment. For the last decade, there hasn't necessarily been a significant amount of, say, greenfield projects being engineered to go to the West Coast. We're kind of starting from scratch. I think what we're hearing from the government is relative support for industry to start to assess some of those situations. We continue to believe incremental LNG is going to be needed off the West Coast and that is a very logical outcome as it relates to the discussion around crude oil pipelines. It's interesting to talk about a pipeline, but if you still have an emissions cap and a tanker ban, that obviously is a huge impediment to a new oil pipeline.

There are certainly lots of things that need to be worked through. We are positive in terms of what we're hearing and what we're seeing in the reach outs to industry. I just think it's complicated and it's going to take some time to work through the system.

Thank you.

Speaker 1

Thank you. Your next question comes from the line of Robert Hope from Scotiabank Global Banking and Markets. Please go ahead.

Morning everyone. Just one for me. The MD&A specifically referenced that the supply agreement for Dow is mutually binding. How have the discussions on the supply agreement changed, just given recent commentary from Dow and the delay there, and is it the expectation that the agreement will come into effect regardless of when the craft enters service.

Speaker 0

Sorry, Robert, did you say b Discussions?

The discussions.

Oh, the discussion. Sorry. I think obviously we've been working very closely with Dow Chemical Canada on that, and obviously they're analyzing the project and ultimately, sort of.

Right.

Sizing the spend profile. What I would say is that we had a tour of our Redwater asset in July, and I think the group there sort of went past the work site. I think, speaking for most of those people, they were very pleasantly surprised to see the amount of activity that was still ongoing at that site. Not speaking for Dow Chemical Canada, but it was clear that there was a ton of activity still ongoing. I think you're correct in the words chosen. There's a mutually binding supply agreement there, with an agreement on our part to sell and on their part to buy 50,000 bpd of ethane. It's pretty clear.

Thank you.

Speaker 1

Thank you. Your next question comes from the line of Sumantra Banerjee from UBS Investment Bank. Please go ahead. Hi. Thank you for taking my question. Just one for me. Number one, related to power generation and Greenlight, if you're looking at.

Any other opportunities, would you like to do them more similar to a partnership as you would with Greenlight, or just more detail on potential future opportunities?

Speaker 0

I'm sorry, could you repeat the question? We had a hard time hearing.

Actually, we just didn't hear the first.

Speaker 2

Part of the question. Apologies.

Speaker 1

Okay.

All good?

Yeah.

I wanted to ask about potential future power generation opportunities and if you'd follow a similar strategy with partnerships such as Greenlight or any other details that you could provide.

Speaker 2

Yeah, I think for now we're not focused on future power opportunities. We're really happy with our JV with Connecticore and really focused on getting this potential data center opportunity up and built if we are successful. We've talked about this being multiple phases and a significant amount of capital, and therefore, you know, solely focused on this as it stands today.

Speaker 0

Just as a reminder, the rationale for this specific project 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 gas egress on both our processing business and hopefully Alliance. This was a really sort of hand-in-glove kind of opportunity for Pembina, which is why we thought it was interesting to pursue.

Got it. Thank you so much. I'll turn it over.

Speaker 1

Thank you. Your next question comes from the line of Praneeth Satish from Wells Fargo Securities. Please go ahead.

Thanks. Good morning.

Speaker 2

I guess you kind of touched on.

I just want to put a pin on it. I guess, as we.

Speaker 0

Bridge from 2025 to 2026 EBITDA maybe.

Speaker 2

If you can just frame the moving pieces.

Speaker 0

I guess on the you did.

Speaker 2

Give the guidance at the analyst day, but we now have the Alliance rate case, maybe something on the U.S. side, maybe marketing a tad weaker, but then.

Speaker 0

On the tailwinds, you've got a bunch of new projects, mid single-digit volume growth.

Speaker 2

I guess just kind of net net putting that together.

Speaker 0

Should we expect positive adjusted EBITDA growth in?

Speaker 2

2026 or is 2026 more flattish.

Speaker 0

The growth kind of resumes in 2027? Yeah, hey Praneeth, it's Cam here.

I guess what I'll sort of speak.

To the guidance that we've got out there today, which is obviously a fee-based guidance. Obviously, we would continue to see positive fee-based guidance, or excuse me, positive fee-based growth into 2026. I think we were trending very, very strongly on that. Obviously, you know, the Alliance settlement is an unavoidable setback to that for 2026, and we can't ignore that. Outside of that, I think we're doing a tremendous amount of work and we do see visible growth opportunities in the rest of the fee-based business and the team. I can tell you the focus of our team, really starting from a few months ago till now, has been on opportunities for 2026 and adding value and new opportunities. We feel constructive about 2026.

The marketing business will be what the marketing business will be, and I think, you know, I would point that despite the fact that it is a commodity-exposed or commodity-related business, the history of that business has been confined to a relatively narrow range over time. I mean, if you looked at the last few years on an apples-to-apples basis, there's probably a couple hundred million dollar range there in most years. It'll be what it'll be, and we can probably get more pointed on that as we get closer to setting our guidance towards the end of this year. I would point to the fact that we continue to reiterate our 4% to 6% fee-based EBITDA per share guidance through 2026 and are obviously working hard on that.

Got it. That's helpful.

I know you kind of touched on this with the prior question.

Speaker 2

On the Peace, phase three and phase four contracts that expire soon.

Speaker 0

Can you give any more clarity, I guess, on how much of that?

Speaker 2

Capacity has been blended and extended?

Speaker 0

You gave the 7 year average duration, and I think you said that.

Speaker 2

lot of it has, but maybe just can you get a little more granular? Have you recontracted over 50% at this point? Just trying to get a sense there.

Speaker 0

I know it's a competitive process.

Speaker 2

Tied to that, I guess, on the Fox Creek-to-Namao expansion, are you looking to kind of blend.

Speaker 0

Extend some more of those legacy.

Speaker 2

Contracts with that expansion.

Speaker 0

First part? Yeah, you know, I'd say first of all, Praneeth, you know, you can obviously appreciate that it's a competitive market out there. I think obviously we've been pretty transparent for a lot of years on our disclosure, and the fact that the weighted average life has extended from seven years a couple years ago to seven and a half today just purely mathematically has to tell you that a meaningful portion of that has been recontracted. I would also remind you that contracts do not equal capacity. You know that those two are independent. Capacity came over time, and obviously a big, there was a swath of contracts that came with phase three. Subsequent to that, there have been debottlenecks and we've been adding contracts over time. To the earlier points, we've continued to push that recontracting out over time based on our service offering.

Just to follow up on your last question on Fox Creek and Namao specifically, if you take a look back and you break down the entire suite of products that Pembina has, Scott referenced the million barrels, but that's broken out between crude, C2 plus, C3 plus, and C5 plus. As you probably are well aware, Pembina has a segregated system of bringing those products into the Edmonton and Fort Saskatchewan market. With the increased demand and with increased NGLs coming at the system as part of that single-digit growth, mid-single-digit growth that we're seeing here in Western Canada, we're really seeing an uptick on the C3 plus volumes. The specific Fox Creek and Namao, if I just looked into Northeast B.C. alone, we've seen material recontracting.

We've been public about three large Montney producers, and I think one of the things you need to look at is the producers that we have under contract that we've been public about. Of those three, we've talked about Conoco and Tourmaline. If you look into Edmonton west, we've been public about our previous Chevron CUFAC, now CNRL CUFAC, 20-year area of dedication. Through PGI, we've talked extensively about these long-term, fully integrated deals, and we've essentially captured a significant amount of all the volatile oil Montney window and the very liquids-rich Montney oil or remotely windows. There's a lot of NGLs coming at us. The reason I'm pointing that out is that when we see a constraint on a certain aspect of our system, that's where we need to deploy the capital. That capital there wouldn't be a blend and extend.

These are new contracts that our customers are taking to get their C3 plus into Fort Saskatchewan. It wouldn't be a standalone project. It's in the need, necessity of customers' demand.

That's helpful.

Speaker 2

Thank you.

Speaker 1

Thank you. There are no further questions at this time. I will now hand the call back to Scott Burrows for any closing remarks.

Speaker 2

Thank you for your time today, and as I said previously, I hope everybody has a great summer. Thanks, everyone.

Speaker 1

This concludes today's call. Thank you for participating. You may all disconnect.