Canada’s Pembina assures on US tariffs and Path2Zero delay

TORONTO (ICIS)–Pembina Pipeline does not expect material near-term impacts from the US tariffs or from the delay of Dow’s Path2Zero petrochemicals project in Alberta province, the top executives of the Canadian midstream energy company told analysts in an update on Friday.

TARIFFS
Given the “highly contracted” take-or-pay nature of Pembina’s energy business, there should be no material near-term impacts from tariffs, they said.

Also, Pembina’s energy products were compliant with the US-Mexico-Canada (USMCA) trade agreement, they added and went on to note that USMCA-compliant products were currently not subject to the 10% US tariff on energy.

Furthermore, so far, the company has not observed any significant changes to producer activity in the Western Canada Sedimentary Basin (WCSB) because of the tariffs, they said.

PATH2ZERO
Pembina executives noted that although Dow delayed Path2Zero, it reiterated its commitment to the project.

Therefore, other than changing the in-service timelines, the delay should have no impact on Pembina’s agreement to supply Path2Zero with ethane, they said.

Up till now, Pembina has not spent “material capital” on building capacity and infrastructure to support the ethane supply agreement, and it does not expect to do so in 2025, they said.

The company would continue to assess options on how to supply the ethane in the most cost-effective way, and the delay would give it more time to do so, they said.

Options included building an additional de-ethanizer tower at Pembina’s Redwater fractionation complex in Alberta, they said.

Analysts asked whether the supply deal included a “sunset clause” in case the Path2Zero delay should turn out to be substantial, but the Pembina executives declined to comment on this.

An analyst also asked whether Canadian policies or other factors may have played a part in the delay of Path2Zero, but the Pembina executives decline to comment.

Canada’s federal government in March suspended the country’s consumer carbon tax but left industrial carbon pricing in place.

Carbon pricing is key in ensuring the viability of low-emissions industrial projects.

Trade group Chemistry Industry Association of Canada (CIAC) supports industrial carbon pricing as a tool to encourage companies to reduce emissions in a cost-effective way.

However, the trade group has suggested that in light of the ongoing trade and tariff tensions, Canada may want to review its industrial carbon pricing rules.

Thumbnail Photo: Pembina’s Redwater fractionation complex northeast of Edmonton, Alberta. (Source: Pembina)