Pembina Pipeline (TSX: PPL) has sanctioned the $570 million Heartland Extraction Plant, a new 750 million cubic feet per day straddle facility on the Yellowhead Pipeline that nearly doubles the company’s ethane commitment to Dow. The greenlight, anchored by a long-term supply deal tied to Dow’s Path2Zero project, pushes Pembina’s total ethane deliveries to the chemical giant to 57,500 barrels per day — 15% above the original 50,000 bpd arrangement.
The plant, to be built on Pembina’s existing extraction rights along the Yellowhead Pipeline, is an upsized successor to the previously announced Yellowhead Extraction Plant. Target in-service is late 2029, which aligns with Path2Zero’s own expected startup.
The expanded commitment runs on two tracks. Under an amended version of the companies’ original supply agreement, Pembina will deliver 35,000 bpd to Dow from the moment Path2Zero comes online. A new long-term agreement tied specifically to HEP adds another 22,500 bpd, ramping to that level by the end of 2030. Pembina will pull the 35,000 bpd tranche from its existing portfolio — deep cut gas processing plants, its ethane-plus transportation franchise, and fractionation capacity — before HEP turns a single valve.
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Following extraction at the new plant, the ethane-plus mix flows to Dow’s Fort Saskatchewan facility and Pembina’s Redwater Complex for processing.
Pembina doesn’t hand over the full barrel, though. The company retains associated propane-plus production and keeps downstream fractionation and marketing exposure on up to 9,500 bpd of propane-plus NGL — a strip of commodity upside running alongside the project’s contracted revenue base.
That structure shapes the return profile. HEP’s EBITDA will blend fixed-fee revenue with frac spread exposure, and Pembina expects a build multiple of 5 to 7 times using long-term average historical pricing. The company said sanctioning the plant supports its 5–7% fee-based adjusted EBITDA per share growth target through 2030.
Pembina also framed HEP as more than a single-contract build. The plant includes incremental capacity for future opportunities beyond the volumes committed to Dow, leaving room to layer on additional throughput as Western Canadian supply grows.
“We have strengthened our relationship with Dow while advancing Pembina’s strategy and ability to deliver capital-efficient growth,” said Scott Burrows, President and Chief Executive Officer of Pembina. “By aligning volumes with Dow’s needs and leveraging our existing asset base, we are enhancing the value of our NGL franchise and catalyzing hydrocarbon demand in Western Canada.”
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