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Good morning, ladies and gentlemen, and welcome to the Pembina Pipeline Corporation Fourth Quarter 2024 Results Conference Call. [Operator Instructions]

This call is being recorded in February 28, 2025. I would now like to turn the conference over to Dan Tucunel, VP of Capital Markets. Please go ahead.

Thank you, Constantine. Good morning, everyone. Welcome to Pembina's conference call and webcast to review highlights from the fourth quarter of 2024.

On the call today, we have Scott Burrows, President and Chief Executive Officer; and Cameron Goldade, Senior Vice President and Chief Financial Officer, along with other members of Pembina's leadership team, including Jaret Sprott, Janet Loduca, Stu Taylor, Eva Bishop and Chris Scherman.

I would like to remind you that some of the comments made today may be forward-looking in nature and are based on Pembina's current expectations, estimates, judgments and projections. Forward-looking statements we may express or implied 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 February 27, 2025, for the period ended December 31, 2024, as well as the press release Pembina issued yesterday, which are all available online at pembina.com and on both SEDAR+ and EDGAR. I will now turn things over to Scott.

Thanks, Dan. We were pleased yesterday to report our fourth quarter results, which included quarterly earnings of $572 million, record quarterly adjusted EBITDA of $1.254 billion and record quarterly adjusted cash flow from operating activities of $922 million or $1.59 per share. We also delivered 2024 full year earnings of $1.874 billion, record annual adjusted EBITDA of $4.408 billion and record full year adjusted cash flow from operating activities of $3.265 million or $5.70 per share. A record financial year reflects the positive impact of recent acquisitions, growing volumes in Western Canadian Sedimentary Basin and a strong contribution from the marketing business. In addition to strong financial and operational results, 2024 was marked by several accomplishments that highlighted the successful execution of Pembina's strategy and our focus on strengthening our existing franchise, increasing our exposure to lighter hydrocarbons and resilient end-use markets and accessing global market pricing for Canadian energy products.

Highlights included growing our presence in resilient Northeast U.S. natural gas and NGL markets by fully consolidating ownership of Alliance and Aux Sable, furthering global market access for Canadian natural gas producers by reaching a positive FID on the Cedar LNG project, adding capital efficient timely and certain capacity to accommodating growing Western Canadian Sedimentary Basin production through completion of the Phase VIII Peace Pipeline expansion, supporting growth focused Montney and Duvernay area customers with tailored solutions through 2 PGI transactions that included an expected $700 million gross to PGI funding for further infrastructure development that will be underpinned by long-term contracts and capitalizing on long-term stable demand for ethane from Alberta's growing petrochemical industry by entering a 50,000 barrel per day ethane supply agreement with Dow. We also continued commercial successes across the business in 2024, including executing incremental contracts or renewing contracts for approximately 170,000 BOE per day of pipeline transportation primarily on Alliance and Peace Pipeline as well as 25,000 barrels per day on the Nipisi pipeline. Over 6 million barrels of storage at the Edmonton terminals, approximately 200 million cubic feet per day of gas processing, primarily at Musreau, Patterson Creek in K3 and additional fractionation services across the Redwater Complex. On the major project front, we continue to progress various in-flight construction projects expected to enter service in 2026, including the RFS IV expansion, the Wapiti plant expansion and the K3 cogeneration facility. We are also looking forward to the start of construction of Cedar LNG's floating vessel in mid-2025.

Further, we are continuing to progress infrastructure solutions to meet Pembina's commitment under the 50,000 barrel per day ethane supply agreement with Dow. Pembina is seeking to fulfill its commitment in the most capital-efficient manner possible and is evaluating a portfolio of opportunities, including the addition of a de-ethanizer tower at RFS III within the Redwater Complex. By leveraging its existing assets and capabilities, Pembina now expects the total capital investment required to be less than $300 million below the low end of the range previously communicated, resulting in improved capital efficiency as there is no change in the forecasted adjusted EBITDA contribution associated with the Dow supply agreement. And we are actively developing additional expansion opportunities to support growing demand for services on our conventional pipelines. These include the Taylor-to-Gordondale project, which is currently in the phase of the Canada Energy Regulators process and expansion of the Peace Pipeline system to add up to approximately 200,000 barrels per day of capacity to its market delivery pipeline from Fox Creek-to-Namao and additional expansions to support volume growth in Northeast B.C.

Finally, we were excited to announce yesterday 2 new business updates. The first was that Pembina has entered into agreements for a 50% interest in the Greenlight Electricity Center Limited partnership, which is developing a gas-fired combined cycle power generation facility to be located in Alberta's Industrial Heartland on land owned by Pembina adjacent to its Redwater Complex. The Greenlight Electricity Center has been and will continue to be developed by Kineticor Asset Management. Greenlight is in active discussions with data center customers to commercially underpin the project and believe the lands within the Alberta Industrial Heartland are well suited given their proximity to transmission and utility infrastructure. The government of Alberta has set an ambitious target of attracting $100 billion in data center investments by 2030, encouraging developers to bring their own power. Pembina and Kineticor are committed to supporting this vision by delivering reliable and cost-effective power solutions at scale to data centers looking to locate in Alberta. Along with our direct investment in Greenlight, Pembina is well positioned to leverage its existing and future value chain to further support the project. The proximity of Alliance Pipeline offers potential accretive expansion opportunity to provide natural gas supply into Greenlight Electricity Center and the potential future development of Alberta Carbon Grid may provide a future emissions reduction solution. This is a great example of a project we had envisioned when we first announced the development of the Alberta Carbon Grid and the Pembina Low Carbon Complex. We are excited to be partnering with Kineticor to extend our value chain even further to provide power to a promising new Alberta-based data center industry. The second announcement was that Pembina has secured the sole extraction rights from the Yellowhead Mainline, a 1 billion cubic feet per day natural gas delivery pipeline that is under construction by ATCO. Pembina is currently advancing engineering of an up to 500 million cubic feet per day straddle facility at which up to 200 -- sorry, 25,000 barrels per day of NGL mix would be extracted from the natural gas stream and transported to Fort Saskatchewan, Alberta for fractionation and sale. The straddle facility would be located on Pembina's owned land and complement our already significant experience building and operating liquids extraction facilities that include approximately 1.8 billion cubic feet per day of extraction capacity to our Empress and younger facilities. The many successes of 2024 and followed by continued momentum into early 2025. Together, they reflect Pembina's leading position in the heart of the WCSB and the many opportunities available to enhance and expand our service alongside a growing Canadian energy industry.

I will now thing -- turn things over to Cam to discuss in more detail the financial highlights for the fourth quarter and full year.

Thanks, Scott. As Scott noted, Pembina reported record fourth quarter adjusted EBITDA of $1.254 billion. This represents a 21% increase over the same period in the prior year. In pipelines, factors impacting the quarter primarily included a higher contribution from Alliance due to increased ownership following the Alliance/Aux Sable acquisition and higher demand for seasonal contracts, higher revenue related to the timing of capital recovery recognition, higher volumes on the Nipisi pipeline, higher contracted volumes on the Peace Pipeline system and contractual in placement adjustments on tolls, which were largely offset by earlier recognition of take-or-pay deferred revenue during the first half of 2024.

And finally, lower net revenue on the Cochin Pipeline, largely due to lower front holds and lower interruptible volumes during the period. In facilities, factors impacting the quarter included the inclusion of Aux Sable following the Aux Sable/Alliance acquisition and a higher contribution from PGI due to higher revenue associated with oil batteries acquired in the fourth quarter of 2024 as well as higher volumes at certain PGI assets and the timing of capital recovery recognition. In marketing and new ventures, fourth quarter results reflect the net impact of higher net revenue from contracts with customers due to increased ownership interest in Aux Sable, higher NGL margins and lower realized gains on commodity-related derivatives.

Finally, in the Corporate segment, fourth quarter results were higher than the prior period due to lower incentive costs. Earnings in the fourth quarter were $572 million. This represents an 18% decrease over the same period in the prior year. In addition to the factors impacting adjusted EBITDA, the decrease in earnings in the fourth quarter was primarily due to the net impact of the reversal of the previous impairment related to the Nipisi pipeline, which impacted the fourth quarter of 2023. Unrealized gains recognized by PGI on interest rate derivative financial instruments compared to unrealized losses in 2023. Unrealized losses on commodity-related derivatives compared to unrealized gains in the prior period, unrealized gains on interest rate derivative financial instruments recognized by Cedar LNG and higher interest expense and higher income tax expense. Total volumes were 3.67 million barrels per day in the fourth quarter. This represents an increase of 6% over the same period in the prior year reflecting the net impact of the Alliance/Aux Sable acquisition, the reactivation of the Nipisi pipeline, lower volumes on the Peace Pipeline system due to earlier recognition of take-or-pay deferred revenue in the first half of 2024, which more than offset the increase from higher contracted volumes and lower interruptible volumes on the Cochin Pipeline.

The fourth quarter contributed to full year results that included earnings of $1.874 billion, record adjusted EBITDA of $4.408 billion, which was 15% higher than in 2023. Cash flow from operating activities of $3.214 billion and record adjusted cash flow from operating activities of $3.265 billion. Thanks to strong results in 2024, Pembina generated meaningful free cash flow, which is allocated to strengthening the balance sheet and returning capital to shareholders by increasing the common share dividend by 3.4%. At December 31, 2024, based on the trailing 12 months, the ratio of proportionally consolidated debt-to-adjusted EBITDA was 3.5x. Notably, this ratio reflects only 3 quarters of contribution from the increased ownership in Alliance and Aux Sable, but all of the debt associated with that transaction. Our leverage remains at the low end of our targeted range reflects our strong balance sheet and supporting a strong BBB credit rating.

I'll now turn things back to Scott.

Thanks, Cam. In closing, I'll once again say how excited we are about the opportunities ahead. We believe Pembina is best positioned to benefit from the growth we are seeing and expect to continue to see in the WCSB. Our extensive network of strategically placed assets provides a full suite of midstream and transportation services across all commodities, natural gas, NGLs, condensate and crude oil, and we are confident that our customer service offering provides unmatched optionality and flexibility that our customers value. We have an abundance of opportunities ahead of us and a clear pathway of -- to growth with approximately $4 billion of secured projects currently under construction and more than $4 billion of additional projects in various stages of development. We are looking forward to the year ahead and continuing to share our progress with you.

Thank you for joining us this morning. And can you please open up the line for questions.

[Operator Instructions] Your first question comes from the line of A.J. O'Donnell from TPH.

I was just hoping to maybe start on the rights to the NGLs of the Yellowhead Mainline project. Trying to think about what kind of commercial and growth opportunities that might create for you? Trying to think of this maybe along the lines of additional frac capacity or export dock capacity.

A.J., this is Jaret here. Thanks for the question. So yes, like Scott mentioned in his opening remarks, we were awarded exclusive extraction rights on the Yellowhead Mainline which will go into service kind of the latter half of 2027 based on public disclosure. We estimate we could build probably something in the neighborhood of maybe 500 million a day of extraction capacity, resulting in approximately 25,000 barrels of NGL extraction. So what we're doing right now, A.J., is we're just evaluating our 2 supply portfolios of C2, one which we've been fairly public with lately supporting Dow's Net-Zero cracker, just evaluating how would this C2 fit into our overall portfolio. So that's ongoing, and we expect to have a little bit more information on that probably at the May call. But then obviously -- so that's the C2 component of the opportunity. And then with the C3+, obviously, we're actively building RFS IV, which is an incremental 55,000 barrels of C3+ extraction capacity fractionation. These barrels, we could just shift it across the river and put that into our existing frac capacity if we're not fully contracted. And that would be very complementary to our marketing NGL book today. We have a large portfolio of C3+.

It'd be very complementary to that. And Chris and his team, they would continue to find the best market for those products, either domestically into the United States and/or internationally through West Coast exports. Scott did mention through the acquisition of Aux Sable and closing that here this summer, Pembina does have a nice contiguous block of land right adjacent to Dow's Cracker and that will be the terminus essentially of where we would put our extraction facility. We have access to the AEGS pipeline. That's the Alberta Ethane Gathering system right there and then the Redwater fractionation complex, where we would most likely send our C3+ from this is just across the river, and we have existing pipelines that go back and forth between today. So we have operations in the area. We have actually between Channahon, Younger and Empress, we have well over 3 Bcf of this type of operation. So we're well versed in how to build, operate these types of assets. Also mentioned -- yes, sorry, A.J., I just going to also mention that the Alliance Pipeline, Scott mentioned the opportunity there as it comes in close proximity to Greenlight but also the Alliance pipeline goes right through this plot of land. So there'd be further evaluation down the road about potentially if we ever wanted to do straddling that pipeline down the road. So that's an option as well.

Okay. I appreciate the detail. That kind of goes into my next question just on Greenlight and just trying to think about the potential size of the gas requirement for the facility and how that could translate to additional capacity on Alliance? And then also just kind of along those lines, if these projects kind of make it across the finish line and we see incremental capital invested into Alliance. Does that help mitigate at all the ongoing rate case situation with shippers? I mean I realize that there's a timing mismatch here, but is that being factored into your discussion with shippers currently?

A.J., it's Stu Taylor. With respect to the gas supply, it's one of the things that attracted us to this opportunity. But what we have right now is each phase will consume approximately 80 million cubic feet per day of gas. That will grow as you [indiscernible] the phases get built out. Obviously, that's a significant number for gas egress for the province as well. I'll let Jaret talk more.

Yes. Just on the Alliance. So where we're at with respect to that file and talking a little bit about expansion. So we've essentially met all the CER obligations here in the month of February. And then we have ongoing biweekly meetings with the large shipper group. It's about 40-plus individuals and just working expeditiously to get a negotiated settlement here in 2025 and get that in front of the regulator. What I will say with respect to the expansion, there's some common themes that we continue to hear, A.J. Number one, our shippers on Alliance very much value the service that Alliance provides, they very much like the endpoint getting their gas into Chicago, but also the high reliability, availability and the cost structure of the pipeline. And part of the conversation has got to expansion opportunities. So there is high demand for expansion opportunities from the shipper group, and we're just evaluating that right now, would that be a short haul type expansion opportunity into the Fort Saskatchewan area as industrial demand increases or is that a long-haul type expansion where we go all the way down to the Chicago land area.

If you recall, Alliance was originally set up to do what we call the B side compressors. So building out the B side compressors where Alliance already owns that land today, that would be the long haul and then we could do a shorter haul version just into the Fort Saskatchewan area. So it is an active conversation we're having with the shippers.

Your next question comes from the line of Theresa Chen from Barclays.

Related to the NGLs off of the Yellowhead Mainline and the potential of 500 of MMcf per day straddle facility. Can you talk about how -- what kind of capital requirement that could entail? And as it translates to potentially 25,000 barrels per day of NGL with a significant C2 component. How much of the 25,000 could be C22 supplement your 50,000 barrel per day supply agreement and then between that, the 300 -- and the $300 million de-ethanizer, how much of the 50 could those 2 pieces comprise? Would just love to get more details of the quantitative makeup of the 50,000 barrels per day as you see it?

Okay. Yes, I'm going to try to unpack those in order. So I think the first question was with respect to cost. An asset of this size, we believe, would be in that neighborhood of $400 million to $500 million. Now this is fairly preliminary. We would -- we're obviously going to be doing a significant amount of more work with respect to the engineering and as we progress through our gating system here at Pembina, but that's the rough order of magnitude. With respect to the composition of that 25,000, you would expect to be roughly, call it, 50% of that would be ethane. The remainder would be your C3+ component. And then how does it fit into our overall portfolio. So that's what we're talking about right now is we have our existing supply agreements. There's also demand for future expansions with -- in Alberta. Dow has been very public about Phase III, et cetera. So we're just evaluating right now, do we put these barrels into part of our existing supply portfolio? Or do we make this part of the incremental? You mentioned RFS III de-ethanizer. We've been fairly public about that. There is an opportunity there to -- we have existing barrels in our portfolio that we can add to the incremental demand. There is new opportunities such as the RFS III de-eth and then there's these barrels. So it's a little bit too early and premature to be talking about the actual details, but expect to provide a lot more color at our May conference call.

Understood. And maybe turning to the LNG front, given the geopolitical developments across Europe, Russia and Ukraine as well as the policy movements in the U.S., can you talk about your progress to date in contracting the capacity you have remaining on Cedar?

It's Stu again. We've been working hard since late 2024 working with potential acquirers of this capacity, we're very pleased with the response that we've had. We have a broad range of customers who are looking for LNG service, including both Canadian producers as well as NOC and IOC counterparts looking to participate. We've had term sheets out and term sheets returned well in excess of the capacity that we have. And so we're working through that process. We will soon be looking to shortlist and begin more detailed negotiations with these counterparts, and we're very excited about where we sit at this point in time.

Your next question comes from the line of Praneeth Satish from Wells Fargo.

Maybe I'll just start with 2 questions here on the Greenlight project. So first is just trying to understand how much is your share of CapEx if we just kind of assume $2,000 per kilowatt than your share could be as high as $1.8 billion. And I know it's going to happen in phases, but I just want to understand if that's in the range of how you see your investment into the project and the time frame for spending?

Yes. So we're essentially 50% of the project at this point in time, early days, but we're looking at essentially $1.5 billion per phase of 450 megawatts, so up to 1,800 megawatts. So our share would be, again, 50% on a go-forward basis. Our plan -- there will be a phased development. There could be opportunity as we stage this out, we could accelerate some of the phases and combine them. But at this point in time, it's a phased development of the 4 phases with construction. FID beginning, we're targeting some time in '26 and then construction through to 2030 -- 2029, 2030.

And maybe Praneeth, I'll just chime in. It's Cam here. And just as a reminder to all the listeners, where we stand today, following the Alliance/ Aux Sable acquisition, our run rate of free cash flow after dividends available for investment is in the range of about $1.25 billion to about $1.5 billion per year. We've obviously said that through 2025 and 2026, as we're closing out some of the in-flight projects and the heaviest spend period on Cedar. We are running at probably a little above -- a little excess free cash flow but obviously closer to it. And then 2027 and beyond, we begin generating material free cash flow again available for all that investment. So that obviously lines up really well with the opportunities that we're talking about here.

Got it. That's helpful. And then maybe just on the project itself, Greenlight. Can you help us understand what the return profile looks like relative to your traditional midstream investments. I mean this is a bit of a step out in terms of taking a piece of the power generation part. So would you expect higher returns than your traditional hurdle rates? And then can you say whether the economics would be secured by long-term contracts? Or would you be taking on any merchant exposure?

Praneeth, let me start with -- I think it was your second question there. And I think one of the things that we really want to make sure is very clear is that, obviously, the power generation angle of this opportunity is a great project in its own right, but what really makes us excited about it as it relates to Pembina's value chain, is the integration potential. So the opportunity -- obviously, we have a significant gas business today through our gas processing business through Alliance, Obviously, we have an aspiring carbon sequestration solution. So the integration of the opportunity with those projects is what really got us excited about it. To your specific questions, we would see sort of base returns consistent with the midstream infrastructure return at this point, probably a little early to start throwing out exact multiples, but I would say it's within that range. And lastly, I think it is, of course, our intention to have a long-term contract underpinning this project. And obviously, that's -- those negotiations are ongoing.

Your next question is from the line of Rob Hope from Scotiabank.

Maybe going back to Alliance, can you add some color on kind of what the initial consultations have been with shippers as well as is the expectation that the existing contracts could get reopened? Or is this really just focused on IT and the spot tools?

Yes, Rob, thanks. It's Jaret here. So I would categorize the group into just a few buckets, right? So I mentioned there's obviously 40-plus folks in the room. You have long-term shippers, you have people who play in the seasonal strip in the IT component and then some really large long-term shippers, and then you have some of our smaller shippers on the pipeline. So those are kind of the 3 groups that we're working with right now. I can't get into too much detail with respect to what everyone wants, but we are trying to hone into a mutual agreement that meets the needs of all 40-plus individuals. And I can say it's going very well, and the conversations have been extremely respectful and progressive as we continue to work. With respect to the contracts, that is actually what some of the conversations are around depending on which route we go, there could be different outcomes. And obviously, people that have a lot of capacity on the pipeline when I keep that capacity because obviously, it supports your condensate development plans and those types of things long term. And there's obviously people who maybe don't have a lot of capacity on the asset who would love to have more capacity on the asset. So that's something that we're working through. But at the end of the day, the takeaway is, it is a little bit early. I think in May, we'll be able to give a little bit more color, demand is high for the asset. And we just got to kind of "grind through it here over the next couple of weeks". Anything else Cam, Scott, do you want to add on that? No.

Right. Appreciate that. And then maybe just going back to the ethane capital intensity commentary about being below the $300 million range by maintaining the EBITDA profile there. Can you maybe add a little bit more color on kind of where you're seeing the savings or kind of where you're leading to in terms of the optionality and the end solution.

It's not so much savings, Rob. It's just really -- like we had a portfolio of projects that could add to the totality of our supply book. And it's really -- we just got really diligent in just going through those and evaluating each one on a stand-alone basis. Where did we have extra capacity across our enterprise, where we could maximize the ethane recoveries through existing assets. So that plays a portfolio -- or sorry, a portion of the portfolio. So really just getting militant and grinding it down. And ultimately, it's kind of -- we've been signaling it's kind of honing into that Redwater III de-ethanizer tower, which is the most capital efficient. Redwater III was built with a lot of the bells and whistles to accommodate that tower. So it was really just doing the work and working through our portfolio of opportunities and getting the maximum out of our existing steel that we have in the ground.

So through a combination of that, the team did a tremendous job of coming up with being at that low end of that capital range. And now Yellowhead, obviously, now we have to just take a step back and evaluate the entire portfolio, with Yellowhead, obviously, comes a lot more C3+. So just working that into the mix. But like I said earlier, there is incremental demand for incremental phases of polymer development here in Alberta.

Your next question comes from the line of Aaron MacNeil from TD Cowen.

How would you characterize the Greenlight projects gas turbine slot reservations and other long lead time items and more generally, how far along is the sort of feed process?

It's Stu again. So we've been working with the Kineticor development team for over 1.5 years. They are at the beginning of -- our excitement with them is their expertise that they have, and they just completed the Cascade power plant in the Edson area as well as they progress the AESO queue position. And again, that's what excites a lot of our data center customers or the potential is the speed to market. We are going to be in that turbine queue to as we go out. We have not placed those orders at this point in time. But again, I mentioned FID is expected in 2026 and our in-service date in the 2030 time frame. We're happy where we are with the queue. We're happy with the progress. We're engineering work to take place in 2025 and reaching that FID decision in 2026.

Got you. And then maybe just to return to A.J.'s question on increased NGL volumes flowing through the system. Can you comment specifically about that stock capacity he asked about and helping your customers just export those incremental volumes more generally.

Go ahead.

Aaron, it's Chris Scherman. We're certainly paying a lot of attention to what volume growth in general looks like in the basin, and that's a piece of it. And undoubtedly continue to see the value of West Coast export. I think we've talked about some of the efficiencies we're driving at our own facility. We've talked about some of the other projects that are on the go on the West Coast. And undoubtedly, each incremental barrel definitely supports those export positions. So we're keeping an eye on them. We don't have anything specific linked to or related to Yellowhead per se. But obviously, we're bullish West Coast export and like what we have there today and see that growth being supportive of the projects that are underway.

It should be noted that these C3+ barrels would be -- like they would be proprietary Pembina barrels. They wouldn't be the barrels of the shippers on the Yellowhead pipeline.

Your next question comes from the line of Manav Gupta from UBS.

I wanted to go to Slide 15, executing inside projects. Number of projects coming on in the first half of 2026, can you give us like some kind of progress percentage? How -- what's the completion at this point and general progress that you are making to getting these 3 projects all in first half of 2026.

Yes. Thanks for the question. So project execution, I'll speak to probably just the 3 largest ones we have on the go here. So the K3 Cochin, the Wapiti expansion -- Wapiti Gas Plant expansion, PGI focused projects or PGI projects that Pembina is executing and then our RFS IV frac expansion and rail expansion. So all 3 of those projects are going extremely well and no concerns with respect to timing and/or execution. We've got through each one of those projects through some pretty material milestones. Equipment is showing up, active boots on the ground in all 3 of those locations. So no supply chain concerns. And I would like to just have a bit of a shout-out with respect to throughout the last couple of months, there's been some pretty extreme weather here in Alberta. The safety execution throughout the last couple of months and previous to that has been excellent. It's been world-class in Pembina's opinion. And the cost structure continues to come in as expected. So like I said, we're getting through some pretty key milestones here and the equipment is getting delivered to site, and it's really impressive to see these new assets coming out of the ground.

Perfect. My quick follow-up here is, you obviously talked to a lot of producers. What's your internal outlook for the West Canadian Sedimentary Basin volume growth, whether it's gas or liquids or oil like how should we think about the growth over the next 2 or 3 years based on your internal estimates?

Yes. It's Scott here. When we use a lot of our own internal data and third-party data and generally speaking, they're lining up. When we look at third-party data, we're generally seeing growth in that kind of mid-single-digit area. And I would say that that's relatively consistent with our own internal forecast. I would say the only hesitation I have right now is just given all the volatility in the market and the uncertainty that puts a little bit of a cloud over it. But absent that, that mid-single digit is something that we continue to forecast.

I'd maybe just add to that, that although the average is mid-single digits, some of Pembina's biggest shippers. If you go into their detailed public information, some of them are growing at higher than that. And it should be noted that some of our customers are drilling into take-or-pay contracts. Some of them would be over. So although the physical volumes will continue to grow, we believe that we're in a pretty good position to continue to meet their growth demand.

Your next question comes from the line of Maurice Choy from RBC Capital Markets.

Just wanted to come back to the discussion about returns on Greenlight, you mentioned that the base returns will be consistent with your midstream assets. But I suppose if you look at your existing value chain, there can be a relatively wide range depending on your exposure to volumes and prices, for example. So if I think about this, are the returns more close to, say, this -- the more traditional 7x to build multiples that you have? Or are we talking about something goes to 9 or 10x for a long-term contracted take-or-pay infrastructure?

Yes, Maurice, I mean I think negotiations are ongoing. So I'm a little reticent to start to point to a specific data point. I would just say, obviously, I mean, you've obviously painted the range of our return profile historically, and we would characterize it within that range. But given the stage of negotiations, I'm reluctant to sort of specifically quantify it at this stage.

Maybe just holistically, if you took a step back away from Greenlight and look at an opportunity like this, Yellowhead and everything. Where do you sense your -- the appetite for risk and -- versus returns? And has anything changed in the last 6 to 12 months in terms of how you view your next opportunity and how you view your return criteria?

I think what we look at is obviously a full-scale value chain across the business, and obviously, opportunities across that value chain, which continue to come. I think part of it is, obviously, the commercial angle. Part of it is execution and controlling your costs and protecting that. I think Jaret exemplified what we think is one of our advantages in that. Our track record on capital execution, I think, has been incredibly strong historically. And so for us, that gives us a lot of confidence to be able to sort of -- to be able to put forward a compelling proposition to the customers. In terms of the commerce, obviously, that's market facing. I think we have a history of trying to find creative solutions. I think that shows up through a couple of the transactions that we did with PGI and [indiscernible] and Duvernay over the course of this year. I think it's shown up historically in our contracting and our pipelines business. And so we continue to look for opportunities to be creative. Ultimately, the market drives what returns are. But I think we control what we can control. And when you look at sort of our capabilities in building assets specifically, relative to competition, that is one area where we differentiate ourselves and where we believe we have a competitive advantage.

And maybe just finishing off with more holistic strategy question about using Greenlight as an example here. Obviously, you mentioned that Greenlight benefits from being close in proximity to Alliance and maybe what you may want to do with ACG. Does that mean that you can probably scope down future power opportunity to once they're close to infrastructure versus being a more big IPP player within the province?

100%. This is all about the data center play, the value chain extension cited behind the fence on our lands. You're not going to see us do an IPP and [ leverage ] or something like that. This is very focused and targeted and on strategy.

Your next question comes from the line of Spiro Dounis from Citi.

I want to touch first on tariffs. You guys pointed out in the release, no imminent impact to operations. But does seem to have reinvigorated a broader discussion in Canada just around energy infrastructure and maybe what best suits your needs. So curious if that's reshaping how you're thinking about projects that you're pursuing longer term. And if you're already maybe seeing that sort of shift where projects are coming in that maybe weren't on the radar a few months ago?

Yes, it's Scott here. As we pointed out and as you said in the press release, no immediate financial impact from the tariffs. From our perspective, we're hearing all the right things and now we need to start to see all the right things. And so from our perspective, we do see a sentiment change in terms of politicians in terms of the general public, which we think is generally positive for the industry. We've been progressing lots of projects in the background, and we will continue to progress those projects. And hopefully, with what's happening, it will be obvious to the country that these projects need to get built. And so we think that there's definitely positive tailwinds. You're not going to see anything in the next day or 2, obviously, but we continue to see tailwinds in terms of potentially deregulation, speedier project approvals, which should benefit the industry long term.

Got it. That's helpful color, Scott. Second question, just a quick cleanup one related to CapEx. The December guidance pointed to potential for CapEx maybe increase as much as $200 million if more projects got sanctioned. Obviously, you sort of announced a few last night and today. So just curious kind of where we sit with that $200 million number?

Spiro, it's Cam here. I think some of them have progressed along the way. I'd say maybe about half of that has progressed long. I mean one of the big pieces there was the de-ethanizer at RFS. We're continuing to move through gates internally on that as well as some of the Northeast BC spending, which continues to move through gates. So I would say that at this point, we're not all the way towards that upper end. We're marching through the range. And if you want to take a point, probably about halfway.

Next question is from the line of Jeremy Tonet from JPMorgan.

This is Eli Jossen on for Jeremy. Maybe just on the 2025 guide, I mean, saw a pretty strong print in 4Q, and we recognized some seasonality in the business, but how should we think about the $4.2 billion to $4.5 billion range incorporating some conservatism? Is that tied to any cushion for Alliance? Or can you just help frame that up a bit?

Yes. Eli, so I think the way we would characterize the range is a couple of things. Obviously, there is seasonality in our business. And I think it comes from about 3 different places. Obviously, the first is obviously the inherent seasonality in the marketing business, which is weighted to Q1 and Q4. I think that's generally well understood. With the advent of more West Coast egress for the liquids business in the last sort of 2 to 3 years, I mean, obviously, that has moderated some, but even you still see that in a large extent on the pricing side. And I think you can see that this year as well. The second thing would be obviously the repair and integrity work portfolio that occurs in our business. And so often, that results in much of that occurring in the third quarter. Some of our work occurs in the first and the fourth quarter because of winter access only. But there is some seasonality in that just based on obviously getting through spring, getting to work and planning our work plan. And then the last piece would obviously be the Alliance interruptible profile. So as we've seen in past years and continue to be our outlook this year is obviously winter seasons tend to see higher interruptible demand, consequently higher demand for service and that would lead to a relatively softer Q2 and Q3 for that asset relative to Q1 and Q4. In some cases, the seasonality has been in some years upwards of 15%, like from a Q1 to Q2 type of sequential numbers. So I think we think about that and we see that.

I think the last point I would make with respect to the overall guidance for the year is I want to remind everyone that we do our guidance our forecasting based on the forward strip as it relates to the direct commodity exposure part of our business in the marketing segment. And if you look at that business today, obviously, we've had a very good January so far. I mean, I think most of the pricing, despite the tariff noise and volatility has shown up well. We see -- we saw Belvieu propane in the $0.90 range. Obviously, the dollar -- Canadian dollar has weakened, and that's a net positive for our business. But I think when you look at the curves for the balance of the year, I mean, if you were to look at a frac spread, for example, through the balance of the year, there's effectively a $10 difference between January and December frac-spread. So there's a fair amount of backwardation in the curves at the moment. Obviously, if we continue to see each month churn by and not see that backwardation occur, that's a positive for us, but we only know what the market tells us right now or we're willing to put our fingers on and that's what's reflected in the guidance.

I would just add as well. There were some call it, onetime capital recoveries in Q4 and just ensuring that those obviously aren't annualized into 2025. Those were select in 2024. So just ensuring everyone on the call is aware of that and doesn't carry that forward.

That's really good color there. And then maybe just on Cedar. It seems like the project risk profile has decreased meaningfully. So how should we think about future offtake contracts that you do sign maybe carrying a higher rate to reflect that? Can you give us some color about what kind of demand market you're seeing? I know you highlighted in the release, there's a lot of demand. So just color on that contracting environment.

So Stu again. So again, we went out and like you stated, we do believe that we're derisking the project and we undertook and stepped up to FID the project. As such, we're out in the market. We've looked at to benefit from that derisking at this point in time. And as I stated previously, we've had lots of response and lots of positive response from both multinational oil companies and Canadian producers and LNG offtakers today. So we're pretty excited about taking that next step and believe we are, one, derisking the project, as you stated, but at the same time, improving the economics for the project as well.

Your next question comes from the line of Robert Catellier from CIBC Capital Markets.

I just wanted to follow up on the Greenlight project a little bit here. I wonder if you could talk about the genesis of the project and what attracted you to gas-fired power in the first place other than the integration aspect.

Rob, it's Stu again. We started down the path, and we've mentioned and talked about our land adjacent to the Redwater assets, our low carbon complex. And so we started looking for tenants and opportunities to utilize that land and power generation was one of those opportunities. We looked at in the early days, the carbon sequestration link and the connection to that. As things went on and we began working with the Kineticor team and as the markets change and where this power -- what was the plan for the power sale as opposed to just selling into the grid as such. Kineticor changed and pivoted and we started talking about and began meeting with co-locators and hyperscalers, and we've seen this opportunity to take the power generation right to a midstream type model with long-term contracts off the back end. So it quickly became very appealing to Pembina that we could make this look exactly like one of our other businesses. And as you mentioned, beyond that and the success we see with that change in the data center growth. Obviously, the interconnection, we always talked about providing services. Gas supply has potential. We have -- we have the capability and the infrastructure to provide gas, to provide water, to provide the land, as I've already mentioned. And so the integration opportunity just grew, but we like the project right from the start located on our land.

Yes, that's helpful. And that's a good segue to the follow-up here about merchant exposure. I'm just curious, just in general, how much capital are you comfortable allocating to power? I know there's a couple of other projects, Cochin and K3, but -- and then really the merchant exposure you're willing to take on, for example, I know you want to contract this in a way that it looks like the rest of your risk profile. But you have an internal load that can act as a bit of an internal hedge. And then to the extent that your appetite is different than your partners for future phases. For example, they might want to do more on spec than you're interested in doing. Are there off-ramps where that -- in the circumstance where you're not aligned with your partner that you don't have to FID subsequent phases?

Rob, I'll start out. I mean I think, first of all, our intention here is to match the power load with the need from the facility. So we don't see ourselves getting into the merchant power business. That's not what this is about. This is very much about leveraging the facilities in and around our existing assets, leveraging the integration and obviously having a really attractive sort of long-term annuity with very high quality, high creditworthy counterparties and the ability to use that to leverage the rest of our business.

In terms of how much capital we could see allocating to this, I mean, obviously, we've talked about 3 phases as a part of this as sort of the initial piece. I think we need to see where that goes. And what I mean by that is we haven't talked about more than that. If the opportunities to grow are larger, I think we'll analyze that as we always would. But to go back to my initial response, this is not an intention to get into the merchant business, this is a long-term fee-based annuity just like the rest of our business.

Yes. Okay. Understood. And then finally, I just wanted to follow up on the tariff question update here. I'm curious how you're changing your approach to the NGL marketing year given the threat of tariffs and now they've been seemingly kicked out to April, which is not helpful given the marketing year. So are you doing anything in terms of language in your agreements? Or other -- changing maybe the amount of exposure you want to have to marketing this year given the tariff threat?

It's Chris Sherman. You mentioned that timing isn't great for the NGL contract year as far as sort of getting those contracts buttoned down. But we've been largely positioning ourselves, not tariff specific, but largely positioning ourselves as much off the West Coast as possible. And so that's really helped insulate us, first of all. And then I'd say, secondly, at least to date, we've seen a fairly reasonable approach with buyers where tariffs could have an impact and I think we will certainly be adding terms that are tariff specific and finding the right way to get that business done. It's not a big concern for us going into the NGL year.

Your next question comes from the line of Ben Pham from BMO Capital Markets.

I wanted to go to your guidance you initiated last year, the 4% to 6% CAGR. And can you comment on directionally with the Cochin recontracting and some of the levers you're seeing going forward, how you're thinking about where you're tracking to that range?

And then also, your plan directionally, is this an annual role your contemplating on that guide? Or are you -- is it more of a way until it ends and you're rolling a couple of years out?

Ben, it's Cam here. Listen, I think in terms of the guide, obviously, we put it out last May. We're sort of halfway through it. I would say that we're happy with what we're seeing. We're seeing good opportunities, a big focus on that time frame, on productivity and sort of margin in the business. Certainly, we're trending well. I'm sort of reluctant to quantify it at this point in terms of exactly where we are. But certainly, we're very pleased with where we are tracking in the range. And I think there's a number of opportunities here, which the team is working on. And some of them will occur in that time frame, some of them will occur beyond. But like to sort of see that come to fruition before we start to stretch time line out even further. I would sort of mention that I think when we look at our guidance, lots of numbers out there in the peer group. We always talk about ours on a fee-based dollar per share and we think as we look at some of those comparable numbers from some of our peers, the 4% to 6% continues to stack up in line with our peers and well for the most part.

Got it. And maybe a follow-up on Alliance. I'm not sure maybe Stu has mentioned this as things are going quite well. Can you unpack that a bit of that. Is that more of -- you feel pretty good about the timing of how this could get resolved maybe a little bit quicker than you expected in terms of discovery? Or is it related to maybe something else that you're referring to?

Ben, Jaret here. Yes, I can't really get into the details. I think my commentary around it, it's going well, as we have routine meetings with the shipper group. The shipper group is -- we're having great conversations in the room really trying to get down to brass tacks on what all the parties want. So that is the encouragement here. And then I mentioned it earlier in the call, but hopefully in the May time frame, we're able to give a lot more color with respect to the progression of commercial opportunities there.

Your last question for today comes from the line of Patrick Kenny from National Bank.

Yes. I know there's been a lot on Greenlight already, but I just wanted to confirm, since you won't be in the driver seat per se on the development and construction process, and I know you're still currently in negotiations, but curious if you might be contemplating anything unique within your LP with Kineticor that might mitigate or protect your exposure to the risk of cost overruns as the complex has built out just given this isn't really your core business?

Got it, Stu. We -- in taking a step with Greenlight and the JV that we've entered into. We look back, did our due diligence with respect to Kineticor, their capabilities, where they are sitting, the progress that they've made to date and became comfortable. We are a 50% partner as described as we go forward. We made sure that we secured the correct governance that we need to have this go forward on with our controls in place and our oversight that we thought we needed as we would go. We're making sure that we have the right people to stay on top of the project from this position, and we're comfortable where we're going.

Yes. And just to remind, again, these are not new. They've just completed building a Cascade power plant. We're excited about working with them and again, believe that we've made -- selected the correct partner for us in this endeavor.

Got it. Okay. And then switching gears to Northeast BC just with the renewed support for resource infrastructure in the province. Can you provide a bit more color as to what you think industry might need over the near to medium term with respect to whether it's additional fractionation capacity or other infrastructure over and above what you might have in flight today? I'm thinking really especially if and when LNG Canada sanctions Phase II.

This is Jaret. Yes, great question. So obviously, Scott mentioned in our call that we're actively proceeding and Cam mentioned, we're deploying capital on our Northeast BC expansions with just what's in front of us with LNG Canada Phase I, Cedar, Woodfibre, et cetera, we see a material amount of NGLs, condensate and obviously, our C3+ coming out of that area. So our long-term view, the macro view would be not only does Pembina's projects are going to be required, but there's probably other third-party projects that are going to be required and that we're supportive of taking place because the industry is going to require it, especially with LNG Canada Phase II, potentially on the horizon. Maybe [indiscernible] gets a Cedar II one day, et cetera, et cetera. But there is a lot of -- there's a lot of very good momentum with respect to West Coast exports. With respect to fractionation, our RFS IV project continues, really glad that we sanctioned that when we did. It's -- we're going to deliver that at a very effective cost per barrel when you do the math on that greenfield project, and it's getting highly contracted and adding a bunch of more NGLs from Yellowhead to [ Scherman's ] book on our marketing business takes up more NGL capacity. So we do believe macro that another fractionator will be required to meet that NGL demand, obviously, because we're tight. Our competitors have been talking about it, Pembina has been talking about it. And we think we're in obviously a really good situation to be able to capture more of that growth opportunity as well.

Okay. I appreciate that. And not sure if you could provide any update on your application on the Western pipeline system. It looks like we might get a decision in April. But just wondering what, what the financial impact might be if you do get the green light to shut down the line or not sure if you took any provision in the quarter or not. But maybe on the flip side, if you do need to keep the pipe operating roughly what quantum of capital might be required to maintain the integrity of the line?

Okay. Good question, Pat. So yes, we shut down the southern portion of the Western line. I think in 2022, we took that out of service. This pipeline is significantly older than myself. I would say that it's becoming -- it's getting to its useful end of economic life. We're going to have to deploy more and more capital to maintain the operate-ability to save reliable operation of that asset and hence, the abandonment application. The financial impact is very immaterial to our overall business, taking the pipeline out of service. So we're just kind of working through that right now. I don't think -- I won't get into the magnitude of the capital that's required to keep it in service, but it's not a material amount, all things considered with respect to our overall integrity program. But it is a substantial amount of work internally for us to maintain that asset and keep it in the safe, reliable operation that we expect across our asset base.

And Pat, it's Cam here. I would just add that, of course, there is a single customer on that line today. And as has been the case, it's a cost recovery mechanism for capital spend and for repairs and maintenance. We would continue to expect that if investment was required going forward, and that is obviously part of the dynamic here is whether it can be operated in an economic way in the future.

There are no further questions at this time. I would like to turn the call over to Scott Burrows for closing comments. Please go ahead.

Thanks, everybody, for joining us today, and we were very pleased to end the year with a very strong Q4 and some exciting new growth projects. So thanks to all of those on the call, our investors, our shareholders, our employees. We look forward to a great 2025. Thank you.

This concludes today's conference call. Thank you very much for your participation. You may now disconnect.