Pembina Pipeline Income Fund has reported the successful completion of the Horizon Pipeline by its wholly owned subsidiary Pembina Pipeline Corporation. Work on the $400 million project, which began in November 2006, was substantially completed on July 1, 2008, on schedule.
Pembina acquired the Alberta Oilsands Pipe Line ("AOSPL"), now referred to as the Syncrude Pipeline, in late 2001 and since that time has spent over $600 million to expand its service offering in the Athabasca oil sands region. In 2004, Pembina completed a capacity expansion of the Syncrude Pipeline, which provides 389,000 barrels per day of dedicated synthetic crude oil transportation capacity to Syncrude Canada Ltd. The following year, Pembina completed construction of the 136,000 bpd Cheecham Lateral pipeline.
The Horizon Pipeline, which will provide 250,000 bpd of dedicated transportation capacity to Canadian Natural Resources Limited's ("CNRL") Horizon Oil Sands Project, entailed completion of the twinning of the original AOSPL asset and construction of 73 kilometers of new pipeline connecting to CNRL's oil sands facility. Pembina now has 775,000 bpd of fully contracted synthetic crude oil transportation capacity in three distinct pipelines serving customers in this region.
“The Horizon Pipeline is the largest pipeline project ever undertaken by Pembina and we are proud to have completed it on schedule. Since expansion of AOSPL began in 2002, Pembina has achieved a total of over 2.5 million man hours of work without a lost time safety incident. Pembina would like to thank, and to congratulate, all of the designers, suppliers, contractors and other stakeholder groups involved with the successful execution of these projects during a period of unprecedented construction challenges in the Fort McMurray to Edmonton corridor," said Glen Fyfe, Pembina's Project Manager for these undertakings.
The Horizon Pipeline will be operated under the terms of a 25-year extendible transportation agreement providing Pembina a fixed return on invested capital and full recovery of operating costs. Pembina projects that the Horizon Pipeline will contribute incremental net operating income of $45 million per year over the 25-year contract term, commencing on August 1, 2008.
Pembina will continue to focus on the expansion of its service capability in the growing oil sands and heavy oil sector.
“The Horizon Project is representative of the ongoing optimization and build-out of our existing asset portfolio. This model enables Pembina to offer competitive service to customers while realizing attractive returns and minimizing our operating footprint and environmental impact. We expect to employ a similar strategy in the construction of our proposed Nipisi and Mitsue Pipelines. Further, Pembina's existing investments in oil sands and heavy oil infrastructure have embedded growth opportunities which we hope to realize as our customers undertake planned expansion of their oil sands production facilities in the future,” said Pembina VP of Business Development Mick Dilger.
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