Pembina Advances Heartland Extraction Plant to Expand NGL Growth Strategy
Pembina Pipeline Corporation has officially sanctioned the Heartland Extraction Plant (HEP), marking another major step in strengthening its natural gas liquids (NGL) infrastructure and long-term growth strategy in Western Canada. The company also announced important amendments to its ethane supply agreement with Dow, reinforcing a partnership that is expected to play a significant role in supporting Alberta’s expanding petrochemical sector over the coming decade.
The decision to proceed with the Heartland Extraction Plant represents a strategic and capital-efficient investment for Pembina, allowing the company to monetize its liquids extraction rights on the Yellowhead Pipeline while also creating additional future growth opportunities. The project is designed to enhance Pembina’s integrated NGL value chain and expand its industrial footprint within Alberta’s Industrial Heartland, one of Canada’s most important energy and petrochemical hubs.
The Heartland Extraction Plant will be a new 750 million cubic feet per day straddle facility capable of extracting natural gas liquids from volumes transported on the Yellowhead Pipeline. The project is an expanded version of the previously announced Yellowhead Extraction Plant and now includes additional processing capacity to support future development opportunities. By increasing the scale of the project at the sanction stage, Pembina aims to position the facility for long-term operational flexibility and improved capital efficiency.
Construction of the plant is expected to require approximately $570 million in capital investment. The company anticipates the facility will enter service in late 2029. Once operational, the plant will provide significant benefits across Pembina’s NGL network, including new ethane extraction volumes as well as incremental propane-plus production that can be fractionated and marketed through Pembina’s downstream assets.
A key element supporting the project is a newly signed long-term agreement with Dow for ethane supply from the facility. Under the agreement, Pembina will begin supplying Dow with ethane starting in late 2029, with volumes expected to ramp up to approximately 22,500 barrels per day by the end of 2030. The extracted ethane-plus stream will then be processed through a combination of Dow’s Fort Saskatchewan operations and Pembina’s Redwater Complex.
The agreement supports Dow’s Path2Zero initiative, a major petrochemical development project designed to create one of the world’s first net-zero emissions integrated ethylene cracker and derivatives sites. By aligning the timing and volume profile of ethane deliveries with Dow’s revised construction schedule for Path2Zero, Pembina has been able to optimize its infrastructure strategy while also securing long-term demand for its NGL production capabilities.
In addition to supplying ethane, Pembina will retain ownership of the associated propane-plus natural gas liquids produced from the extraction process. The company expects to benefit from downstream fractionation and marketing opportunities tied to up to 9,500 barrels per day of propane-plus production associated with the project. This integrated approach allows Pembina to capture additional value across the NGL supply chain rather than relying solely on transportation revenues.
According to the company, EBITDA generated from the Heartland Extraction Plant is expected to consist of a combination of fixed-fee revenue and frac spread exposure. Based on long-term historical commodity pricing averages, Pembina estimates the project’s EBITDA build multiple will range between five and seven times, reflecting what the company considers an attractive return profile for a large-scale midstream infrastructure investment.
The announcement also included updates to Pembina’s broader ethane supply agreement with Dow. In conjunction with the new Heartland Extraction Plant commitments, both companies agreed to amend the terms of their previously announced long-term ethane supply arrangement.
Under the revised agreement, Pembina will now provide Dow with 35,000 barrels per day of ethane beginning when Dow’s Path2Zero project comes online, which is currently expected in 2029. Pembina plans to source these ethane volumes through its existing integrated infrastructure network, including deep-cut gas processing facilities, its ethane transportation system, and fractionation assets.
When combined with the additional 22,500 barrels per day that will be supplied through the Heartland Extraction Plant agreement, Pembina’s total ethane supply commitment to Dow will increase to 57,500 barrels per day. This represents a 15 percent increase compared with the original agreement, which covered 50,000 barrels per day.
The expanded supply arrangement highlights growing demand for ethane and petrochemical feedstocks in Alberta, where investments in petrochemical processing and low-carbon industrial development continue to accelerate. It also demonstrates Pembina’s strategy of leveraging its existing asset base to support customer growth while generating stable, long-term cash flow opportunities.
Pembina President and Chief Executive Officer Scott Burrows said the agreement reflects the company’s ability to work collaboratively with customers to develop mutually beneficial solutions while supporting broader strategic goals.
According to Burrows, the revised agreements strengthen Pembina’s long-standing relationship with Dow and reinforce the company’s focus on delivering capital-efficient growth. He noted that by aligning supply volumes with Dow’s evolving requirements and utilizing Pembina’s integrated infrastructure network, the company is further enhancing the value of its NGL franchise while supporting increased hydrocarbon demand in Western Canada.
The sanctioning of the Heartland Extraction Plant also aligns with Pembina’s recently announced long-term financial targets. The company has outlined plans to achieve annual fee-based adjusted EBITDA per share growth of between five and seven percent through 2030. Investments such as HEP are expected to contribute significantly toward meeting those objectives by expanding stable fee-based revenue streams while also providing exposure to commodity-linked upside.
The project further strengthens Alberta’s Industrial Heartland as a globally competitive energy and petrochemical hub. The region continues to attract investments in petrochemicals, hydrogen, carbon capture, and other industrial sectors due to its abundant natural resources, extensive infrastructure, and growing focus on lower-carbon industrial development.
For Pembina, the Heartland Extraction Plant represents more than simply another processing facility. It serves as a strategic extension of the company’s broader NGL infrastructure network, connecting upstream gas processing assets with downstream transportation, fractionation, storage, and export capabilities. This integrated model allows Pembina to maximize value creation across the hydrocarbon supply chain while supporting customer growth initiatives.
The announcement also reflects broader trends across North America’s energy industry, where midstream companies are increasingly focusing on integrated infrastructure solutions tied to petrochemical demand growth. As global demand for plastics, industrial chemicals, and related products continues to rise, ethane and other NGLs remain critical feedstocks for petrochemical manufacturing.
By expanding its extraction and processing capabilities while deepening relationships with major industrial customers such as Dow, Pembina is positioning itself to benefit from these long-term market trends. The company’s ability to combine transportation infrastructure, processing assets, and downstream marketing operations provides a competitive advantage in securing future growth opportunities across the Canadian energy sector.
With construction now moving forward and commercial agreements secured, the Heartland Extraction Plant is expected to become an important component of Pembina’s long-term infrastructure portfolio as the company continues expanding its role within North America’s evolving NGL and petrochemical markets.
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