Pembina Pipeline has approved the construction of the C$570m ($412.8m) Heartland Extraction Plant (HEP) in Alberta, Canada.
The HEP will be a 750 million cubic feet per day (mcf/d) straddle facility designed to extract natural gas liquids (NGL) under Pembina’s extraction rights on the Yellowhead Pipeline.
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It is an expanded project, evolving from an earlier proposal for the Yellowhead Extraction Plant and incorporates additional capacity to address future opportunities.
The HEP is scheduled to begin operations in late 2029.
Pembina expects the development will strengthen its operations in the Alberta Industrial Heartland region.
The company has also entered into a long-term agreement to supply chemical producer Dow with ethane from the Heartland facility, starting from late 2029.
Volumes are anticipated to reach 22,500 barrels per day (bpd) by the end of this decade.
After extraction at the Heartland plant, the ethane-plus mix will be processed between Dow’s Fort Saskatchewan site and Pembina’s Redwater Complex.
Pembina will maintain ownership of the associated propane-plus production, allowing the company to benefit from downstream fractionation and marketing of up to 9,500bpd of propane-plus NGL.
Pembina president and CEO Scott Burrows said: “This outcome further demonstrates Pembina’s ability to find win-win solutions with our customers. We have strengthened our relationship with Dow while advancing Pembina’s strategy and ability to deliver capital-efficient growth.
“By aligning volumes with Dow’s needs and leveraging our existing asset base, we are enhancing the value of our NGL franchise and catalysing hydrocarbon demand in Western Canada.”
In connection with the Heartland project, Pembina and Dow have also amended their previously disclosed ethane supply agreement.
Under the revised agreement, Pembina will supply Dow with 35,000bpd of ethane, beginning when the latter’s Path2Zero project starts up, which is expected in 2029.
Including both the new and amended agreements, Pembina’s total ethane supply commitment to Dow now stands at 57,500bpd. This marks a 15% increase from the original commitment of 50,000bpd.
Pembina expects that earnings before interest, taxes, depreciation and amortisation (EBITDA) from the HEP will reflect a combination of fixed-fee income and exposure to frac spread pricing.
Based on long-term historical averages, the company estimates the project’s EBITDA build multiple will fall within a range of 5-7 times.
Pembina operates a range of energy transportation and midstream assets across North America.
In January 2025, the company acquired a 50% working interest in Whitecap Resources’ 15-07 Kaybob Complex. The transaction was executed through Pembina Gas Infrastructure (PGI), a JV between Pembina Pipeline and investment company KKR.
