Pembina and TC Energy Creating Carbon Capture, Sequestration Infrastructure Network in Alberta

CALGARY, AB. — Pembina Pipeline Corporation and TC Energy Corporation plan to jointly develop a world-scale carbon transportation and sequestration system which, when fully constructed, will be capable of transporting more than 20 million tons of CO₂ annually.

By leveraging existing pipelines and a newly developed sequestration hub, the Alberta Carbon Grid (ACG) represents the infrastructure platform needed for Alberta-based industries to effectively manage their emissions and contribute positively to Alberta's lower-carbon economy and create sustainable long-term value for Pembina and TC Energy stakeholders.

Designed to be an open-access system, the ACG will serve as the backbone of Alberta's emerging carbon capture utilization and storage (CCUS) industry, connecting the Fort McMurray region, the Alberta Industrial Heartland, and the Drayton Valley region to key sequestration locations and delivery points across the province, and serving multiple industries.

For Canada to achieve its enhanced climate targets, including a 40-45% reduction in greenhouse gas emissions below 2005 levels by 2030, CCUS technology and infrastructure will need to play a vital role. Pembina and TC Energy are positioned to take a leadership role in the transportation of CO₂ given their collective skills and extensive network of pipeline infrastructure. As a hub-based infrastructure solution accessible to Alberta's largest industrial emitters across industries, ACG will pave the way for Canada to successfully meet its emissions reduction objectives and provides a tangible example of Pembina and TC Energy's commitment to energy diversification, industry collaboration and a lower carbon future.

"Carbon capture, utilization and storage will lower emissions, create jobs, and increase our competitiveness," said the Honorable Seamus O'Regan Jr., Canada's Minister of Natural Resources. "Congratulations to Pembina and TC Energy for coming together with an integrated CO₂ transportation and storage infrastructure solution to lower emissions in Alberta. This is how we get to net-zero."

The Alberta Carbon Grid

Through redeployment, retrofits using proven technology, recapitalization, and optimization of surplus capacity across our collective pipeline systems, including, subject to closing of the transaction, through Pembina's proposed acquisition of Inter Pipeline Ltd. (IPL), ACG is designed to connect the province's largest sources of industrial emissions to a sequestration location north-east of Redwater, Alberta. The principal segments include:

• North Leg: Pembina and TC Energy plan to retrofit existing pipeline systems, combined with new build expansion to connect the Oil Sands to a sequestration hub. Initial hydraulics indicate a design capacity of up to 40,000 tons of CO₂ per day, allowing a significant portion of emissions from the Fort McMurray area to be transported to a sequestration location;
• Central Leg: Pembina and TC Energy plan to retrofit existing pipeline systems, combined with new gathering laterals, to provide interconnectivity in the Alberta Industrial Heartland and gather and deliver CO₂ from and to industrial sources with initial hydraulics indicating a design capacity of 10,000 to 20,000 tons per day;
• Southwest Leg: Pembina and TC Energy plan to retrofit existing pipeline systems, combined with new build expansion, to form the southwest leg of the system. This portion would capture CO₂ from power generation facilities in the region with possible capacity of 10,000 to 20,000 tons per day;
• Future Legs: With customer support, Pembina and TC Energy have identified multiple opportunities to extend ACG into other regions, for example Joffre, Christina Lake, Cold Lake or Swan Hills, enabling future expansions and greater connectivity;
• Sequestration: A reservoir near Fort Saskatchewan has been selected, where large volumes of CO₂ will be sequestered in the Basal Cambrian Sands. Permit applications have been prepared and the companies have worked with the Government of Alberta to obtain support for the Project and set a path to obtain sequestration rights. Initial studies indicate this reservoir will be capable of sequestering more than 2,000,000,000 tons of CO₂, which represents many decades of sequestration capacity. The companies envision delivering to both the proposed sequestration location as well as 3^rd party sequestration locations, establishing the development of a strategically located carbon storage hub in the Fort Saskatchewan region;
• Partnership: Pembina and TC Energy are open to other infrastructure owners with suitable existing infrastructure to join the partnership with a view to enhancing the capability and reach of the Project.

Key Benefits of the Alberta Carbon Grid

• World-Scale Carbon Capacity: The open-access system is being designed with the ability to scale up to more than 60,000 tons per day of capacity, or 20,000,000 tons per annum, representing approximately 10% of Alberta's industrial emissions.
• Interconnectivity: Pembina and TC Energy view the ACG as a multi-sector solution with interconnectivity between multiple key hubs for expanded emissions reductions.
• Environment, Cost and Time Benefits: Utilizing existing assets dramatically accelerates timing, greatly reduces cumulative environmental and community impacts, and is significantly less capital intensive than building a new pipeline. Pembina and TC Energy are targeting the first phase to be operational as early as 2025, with the fully scaled solution complete as early as 2027, subject to regulatory and environmental approvals.
• Economic Development: The construction and operation of the ACG, along with other investments in CCUS technology and infrastructure, will create an entirely new business platform for each company and create new high-value jobs and support economic growth across Alberta.
• Safe & Reliable Operations: World-leading experts have been engaged to evaluate technical and operating conditions of using existing pipeline systems to transport CO₂. The companies have the skills and experience to safely operate these kinds of systems as the characteristics of CO₂ are very similar to other products which are safely transported today, such as specification ethane. The completed feasibility study demonstrates that ACG is achievable while maintaining high standards of safety and reliability. The companies have been working with regulators to advance the Project.
• Customer-Focused Solution: With multiple inlets and outlets, customers will have flexibility to decide delivered CO₂ end-uses including industrial processes and sequestration.
• Cost Advantaged, Fee Based Commercial Framework: The full build out of ACG over time represents the potential for a multi-billion-dollar incremental investment by Pembina and TC Energy over time, sustained by a commercial framework comprised of long-term fee-for-service contracts plus a marketing and trading pool to facilitate CO₂ and carbon offset transactions. At the scale proposed and by repurposing existing pipelines, the tolls on the ACG will be materially less than the current price of carbon in Alberta, ensuring the ACG's long-term competitive viability as a CCUS solution and results in an extremely attractive value proposition for customers.
• Sequestration: Pembina and TC Energy bring experience with sequestration, underground cavern storage, and acid gas and water disposal across our collective asset base.
• Platform for Diversification: Longer term, ACG creates a new platform with a growing reach across Alberta to facilitate production of blue hydrogen and enhance petrochemical facilities in the future, benefiting the Alberta economy, as well as Pembina and TC Energy shareholders.

Advancing ACG is also an important step in both Pembina's and TC Energy's commitment to reduce greenhouse gas emissions intensity across our businesses while supporting emissions abatement across the industry. Given the shared capabilities in this area, Pembina and TC Energy recognize they must take a leadership role in reducing GHG emissions while proudly supplying the world with affordable and reliable energy. 

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