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Pembina looking for merger with Veresen to tap into export-boosted demand

Pembina Pipeline Corp.'s pending merger with Veresen Inc. would fill "a big missing piece" in the form of export opportunities and gas services offerings, Pembina executives said Aug. 2.

Pembina, a primarily liquids-focused company, looks forward to providing western Canadian producers an outlet for gas takeaway into the U.S. and eventually for export via Veresen's planned Jordan Cove LNG export facility in Oregon, Pembina President and CEO Michael Dilger said Aug. 2 in a second-quarter 2017 earnings call.

"Thinking about Jordan Cove, western Canadian producers can readily get their physical gas to where Jordan Cove is going to be, and I think they want to look at export," Dilger said, even as regulatory delays and environmental opposition continue to plague the US$10 billion, 0.9-Bcf/d export project.

Dilger said North American exports will make a difference in the company's future results in terms of pricing and demand. "It's about exports, I think, that are going to be the difference maker and of course winter weather," Dilger said. "We'd rather be exporting ourselves and we're working hard toward that, but when others do it, it's still creates demand, and that's a fundamental difference from, say, five years ago."

On the NGLs side, Pembina anticipates having an alternative market hub in Aux Sable, an NGL facility in Illinois that Veresen owns with Enbridge Inc. and Williams Cos. Inc., to complement the Redwater fractionation complex in Alberta. With the most recent expansion at the facility, Redwater is now the largest fractionator in Canada.

Veresen's midstream assets also have physical connectivity to Pembina's asset base in the Montney and Duvernay shales via the 3,000-kilometer Alliance Pipeline LP system that runs from northeastern British Columbia to the U.S. Midwest, among other infrastructure. Supplementing these assets is the significant amount of capacity Veresen is expected to place into service, which would ramp up Pembina's NGL and condensate volumes in the system, according to Dilger.

Pembina on Aug. 1 posted second-quarter earnings of C$124 million, or 26 Canadian cents per share, an increase from C$113 million, or 25 cents per share, in the prior-year period.