Pembina Pipeline reaches settlement with shippers on Alliance pipeline

Pembina Pipeline (PBA) announced that Alliance Pipeline has reached a negotiated settlement with shippers and interested parties on the Canadian portion of the Alliance Pipeline and filed an application with the Canada Energy Regulator seeking approval of the settlement. Separately, Alliance is soliciting non-binding expressions of interest for a new regional short-haul transportation service. The New Tolls will remain fixed for the 10-year period effective November 1, 2025. Alliance anticipates a significant portion of contracted volumes to take advantage of the 10-year toll, thereby extending the weighted average term of Alliance’s contractual profile. Revenue from biddable transportation service for volumes above long-term firm capacity of 1.325 billion cubic feet per day, will be shared 50/50 between Alliance and firm and seasonal shippers. The Settlement has no retroactive impact on the interim tolls in effect since November 2024. Alliance will return approximately $95M, currently held as an existing liability on Alliance’s balance sheet, associated with eligible recoverable costs. The economic impact to Alliance of the return of this balance is limited to foregone carrying charges. The Shipper Committee supported the Settlement through a vote on July 23. The Settlement is contingent on approval by the CER. Pembina expects the financial impact to Alliance from the Settlement over the next 10 years will be an approximately $50M per year reduction in long-term firm service revenue, plus the impact of the new revenue sharing provision. The estimated impact of the revenue sharing provision assuming an AECO-Chicago natural gas spread of C$1.50 per mcf is approximately $40M.