Exhibit 99.1

PEMBINA PIPELINE CORPORATION

ANNUAL INFORMATION FORM

For the Year Ended December 31, 2018

February 21, 2019

GLOSSARY OF TERMS

Terms used in this Annual Information Form and not otherwise defined have the meanings set forth below:

" 2015 Base Shelf Prospectus " means the final short form base shelf prospectus filed with the securities commissions or similar regulatory authorities in each of the provinces of Canada on March 18, 2015 allowing Pembina to offer and issue, from time to time: (i) Common Shares; (ii) Class A preferred shares; (iii) Debt Securities; (iv) warrants to purchase Common Shares and Debt Securities; and (v) subscription receipts of Pembina (together with the foregoing, collectively, the " 2015 Securities ") of up to $5,000,000,000 aggregate initial offering price of 2015 Securities (or the equivalent thereof in one or more foreign currencies or composite currencies, including U.S. dollars) during the 25 month period that the 2015 Base Shelf Prospectus was valid;

" 2017 Base Shelf Prospectus " means the final short form base shelf prospectus filed with the securities commissions or similar regulatory authorities in each of the provinces of Canada on July 27, 2017 allowing Pembina to offer and issue, from time to time: (i) Common Shares; (ii) Class A preferred shares; (iii) warrants to purchase Common Shares; (iv) subscription receipts of Pembina; and (v) units comprising any combination of the foregoing (together with the foregoing, collectively, the " 2017 Securities ") of up to $3,000,000,000 aggregate initial offering price of 2017 Securities (or the equivalent thereof in one or more foreign currencies or composite currencies, including U.S. dollars) during the 25 month period that the 2017 Base Shelf Prospectus is valid, which 2017 Securities may be offered separately or together, in amounts, at prices and on terms to be determined based on market conditions at the time of the sale and set forth in one or more shelf prospectus supplements;

" ABCA " means the Business Corporations Act (Alberta), R.S.A. 2000, c. B-9, as amended from time to time, including the regulations promulgated thereunder;

" ABSA " means the Alberta Boilers Safety Association;

" AEGS " means the Alberta Ethane Gathering System comprised of 1,330 km of integrated pipeline legs that span the southern and central portions of Alberta;

" AEGS Notes " has the meaning ascribed thereto under " General Developments of the Business – Developments in 2018 ";

" AER " means the Alberta Energy Regulator;

" Alliance " means Alliance Canada and Alliance U.S.;

" Alliance Canada " means Alliance Pipeline Limited Partnership;

" Alliance Canada Marketing " means Alliance Canada Marketing L.P.;

" Alliance Pipeline " means the entire Alliance pipeline system of approximately 3,850 km, including the approximately 3,000 km high-pressure transmission pipeline that runs from northeastern British Columbia to delivery points near Chicago, Illinois, approximately 730 km of lateral pipelines in Canada, the approximately 130 km Tioga lateral, and related infrastructure;

" Alliance U.S. " means Alliance Pipeline L.P.;

" AUC " means the Alberta Utilities Commission;

" Aux Sable " means collectively, Aux Sable Canada, Aux Sable U.S. and Alliance Canada Marketing;

" Aux Sable Canada " means Aux Sable Canada LP and Aux Sable Canada Ltd.;

" Aux Sable U.S. " means, collectively, Aux Sable Liquids Products Inc., Aux Sable Liquid Products LP and Aux Sable Midstream LLC;

" BAR " means Pembina’s business acquisition report dated October 26, 2017 in respect of the Veresen Acquisition;

" B.C. Pipelines " means, collectively, the NEBC Pipeline and the Western Pipeline, as well as certain connector pipelines and provincially regulated pipelines located in British Columbia;

" Brazeau Pipeline " means the Brazeau NGL pipeline system, which includes approximately 500 km of pipelines, including gathering laterals, that transport NGL from natural gas processing plants southwest of Edmonton, Alberta to Fort Saskatchewan, Alberta;

" Canadian Diluent Hub " or " CDH " has the meaning ascribed thereto under " Description of Pembina's Business and Operations – Overview of Pembina’s Business – Pipelines Division ";

" Channahon Facility " means Aux Sable’s 2.1 bcf/d NGL extraction and fractionation facility in Channahon, Illinois;

" Cheecham Lateral " means the lateral pipeline and related facilities, as expanded, delivering synthetic crude oil from a pump station on the Syncrude Pipeline to a terminalling facility located near Cheecham, Alberta;

" Chevron " means Chevron Canada Limited;

" CICA " means the Canadian Institute of Chartered Professional Accountants;

" CKPC " means Canada Kuwait Petrochemical Corporation;

" Class A Preferred Shares " means class A preferred shares of Pembina, issuable in series, and, where the context requires, includes the Series 1 Class A Preferred Shares, the Series 2 Class A Preferred Shares, the Series 3 Class A Preferred Shares, the Series 4 Class A Preferred Shares, the Series 5 Class A Preferred Shares, the Series 6 Class A Preferred Shares, the Series 7 Class A Preferred Shares, the Series 8 Class A Preferred Shares, the Series 9 Class A Preferred Shares, the Series 10 Class A Preferred Shares, the Series 11 Class A Preferred Shares, the Series 12 Class A Preferred Shares, the Series 13 Class A Preferred Shares, the Series 14 Class A Preferred Shares, the Series 15 Class A Preferred Shares, the Series 16 Class A Preferred Shares, the Series 17 Class A Preferred Shares, the Series 18 Class A Preferred Shares, the Series 19 Class A Preferred Shares, the Series 20 Class A Preferred Shares, the Series 21 Class A Preferred Shares and the Series 22 Class A Preferred Shares;

" Class B Preferred Shares " means class B preferred shares of Pembina;

" Common Shares " means the common shares of Pembina;

" Company " or " Pembina " means Pembina Pipeline Corporation, an ABCA corporation, and, unless the context otherwise requires, includes its subsidiaries;

" condensate " means a hydrocarbon mixture consisting primarily of pentanes and heavier hydrocarbon liquids;

" Credit Facilities " has the meaning ascribed thereto under " Description of the Capital Structure of Pembina – Credit Facilities ";

" CRP " means Cutbank Ridge Partnership, a partnership between Encana and Cutbank Dawson Gas Resources Ltd., a subsidiary of Mitsubishi Corporation;

" Cutbank Complex " has the meaning ascribed thereto under " Description of Pembina's Business and Operations – Overview of Pembina’s Business – Facilities Division ";

" Cutbank Gas Plant " means Pembina's shallow cut sweet gas processing facility located at 07-16-062-08 W6M;

" DBRS " means DBRS Limited;

" deep cut " means ethane-plus extraction gas processing capabilities;

" Drayton Valley Pipeline " means the Drayton Valley pipeline system, which includes approximately 1,000 km of pipelines, including gathering laterals, that transport crude oil and condensate from the area southwest of Edmonton, Alberta to Edmonton;

" DRIP " means Pembina's Premium Dividend ^TM() and Dividend Reinvestment Plan and all associated agreements, which were amended and restated effective January 6, 2016, and suspended effective April 25, 2017;

" Duvernay I " has the meaning ascribed thereto under " General Development of Pembina – Developments in 201 7";

" Duvernay II " has the meaning ascribed thereto under " Description of Pembina's Business and Operations – Overview of Pembina’s Business – Facilities Division – Gas Services ";

" Duvernay III " has the meaning ascribed thereto under " Description of Pembina's Business and Operations – Overview of Pembina’s Business – Facilities Division – Gas Services ";

" Duvernay Complex " has the meaning ascribed thereto under " Description of Pembina's Business and Operations – Overview of Pembina’s Business – Facilities Division – Gas Services ";

" EDGAR " means the Electronic Data Gathering, Analysis and Retrieval system;

" Empress " has the meaning ascribed thereto under the heading " Description of Pembina's Business and Operations – Overview of Pembina’s Business – Facilities Division – Gas Services ";

" Encana " means Encana Corporation;

" ENT " has the meaning ascribed thereto under the heading " Description of Pembina's Business and Operations – Overview of Pembina’s Business – Pipelines Division ";

" Equity Accounted Investees " means Pembina’s working interest in Alliance, Aux Sable, Ruby Pipeline Holding Company, LLC, CKPC, Veresen Midstream, Grand Valley I Limited Partnership and Fort Corp;

" FEED " means front end engineering design;

" FERC " means the United States Federal Energy Regulatory Commission;

" Financial Statements " means Pembina's audited consolidated financial statements for the period ended December 31, 2018;

" Form 40-F " means Pembina's annual report on Form 40-F for the fiscal year ended December 31, 2018 filed with the SEC;

" Fort Corp " means, collectively, Fort Saskatchewan Ethylene Storage Corporation and Fort Saskatchewan Ethylene Storage Limited Partnership;

" Fund " has the meaning ascribed thereto under " Corporate Structure – Name, Address and Formation ";

" GAAP " means the generally accepted accounting principles established by the CICA or any successor thereto which are in effect from time to time in Canada;

" Horizon Expansion " has the meaning ascribed thereto under " General Developments of Pembina – Developments in 2016 ";

" Horizon Pipeline " means the pipeline system and related facilities, as expanded by the Horizon Expansion, designed to deliver synthetic crude oil from the Horizon Project into the Edmonton, Alberta area. See " Description of Pembina's Business and Operations – Overview of Pembina’s Business – Pipelines Division ";

" Horizon Project " means the Horizon Oil Sands Project located approximately 70 km north of Fort McMurray, Alberta;

" HSE " has the meaning ascribed thereto under the heading " Other Information Relating to Pembina's Business – Operating Management System ";

" HVP " means high vapour pressure;

" Hythe Gas Plant " has the meaning ascribed thereto under " General Developments of Pembina – Developments in 2018 ";

" IFRS " means the International Financial Reporting Standards, including International Accounting Standards and Interpretations, together with their accompanying documents, which are set by the International Accounting Standards Board, the independent standard-setting body of the International Accounting Standards Committee Foundation (the " IASC Foundation "), and the International Financial Reporting Interpretations Committee, the interpretative body of the IASC Foundation, but only to the extent the same are adopted by the CICA as GAAP in Canada and then subject to such modifications thereto as are agreed by CICA;

" Jordan Cove " means Jordan Cove Energy Project L.P.;

" Jordan Cove LNG Project " means the proposed development, construction and operation of a liquefied natural gas production and export facility and related infrastructure on the west coast of the U.S.;

" Kakwa Gas Plant " means Pembina's 50 percent interest in the shallow cut sweet gas processing facility located at 01-35-060-05 W6M;

" Kakwa River Deep Cut Plant " means Pembina's 50 percent interest in the raw to deep cut sour gas processing facility located at 01-35-060-05 W6M;

" Kakwa River Shallow Cut Plant " means Pembina's 50 percent interest in the shallow cut sweet gas processing facility located at 01-35-060-05 W6M;

" KRIA Agreement " has the meaning ascribed thereto under " General Developments of Pembina – Developments in 2017 ";

" KUFPEC " means Kuwait Foreign Petroleum Exploration Company;

" LGS " means the Liquids Gathering Pipeline System, which includes approximately 400 km of pipelines, including gathering laterals, that transport NGL from northeastern B.C. to Gordondale, Alberta;

" MD&A " means Pembina's management's discussion and analysis for the year ended December 31, 2018, an electronic copy of which is available on Pembina's profile on the SEDAR website at www.sedar.com, in Pembina's annual report on Form 40-F filed on the EDGAR website at www.sec.gov, or at www.pembina.com;

" Medium Term Notes " means, collectively, the Pembina Medium Term Notes and the Veresen Medium Term Notes;

" Medium Term Notes, Series 1 " means the $250 million aggregate principal amount of medium term notes of Pembina issued March 29, 2011. See " Description of the Capital Structure of Pembina – Medium Term Notes ";

" Medium Term Notes, Series 2 " means the $450 million aggregate principal amount of medium term notes of Pembina issued October 22, 2012. See " Description of the Capital Structure of Pembina – Medium Term Notes ";

" Medium Term Notes, Series 3 " means, collectively, the $200 million, $150 million and $100 million aggregate principal amount of medium term notes of Pembina issued April 30, 2013, February 2, 2015 and June 16, 2015, respectively. See " Description of the Capital Structure of Pembina – Medium Term Notes ";

" Medium Term Notes, Series 4 " means the $600 million aggregate principal amount of medium term notes of Pembina issued April 4, 2014. See " Description of the Capital Structure of Pembina – Medium Term Notes ";

" Medium Term Notes, Series 5 " means the $450 million aggregate principal amount of medium term notes of Pembina issued February 2, 2015. See " Description of the Capital Structure of Pembina – Medium Term Notes ";

" Medium Term Notes, Series 6 " means the $500 million aggregate principal amount of medium term notes of Pembina issued June 16, 2015. See " Description of the Capital Structure of Pembina – Medium Term Notes ";

" Medium Term Notes, Series 7 " means the $500 million aggregate principal amount of medium term notes of Pembina issued August 11, 2016. See " Description of the Capital Structure of Pembina – Medium Term Notes ";

" Medium Term Notes, Series 8 " means, collectively, the $300 million and $350 million aggregate principal amount of medium term notes of Pembina issued January 20, 2017 and August 16, 2017, respectively. See " Description of the Capital Structure of Pembina – Medium Term Notes ";

" Medium Term Notes, Series 9 " means, collectively, the $300 million and $250 million aggregate principal amount of medium term notes of Pembina issued January 20, 2017 and August 16, 2017, respectively. See " Description of the Capital Structure of Pembina – Medium Term Notes ";

" Medium Term Notes, Series 10 " means the $400 million aggregate principal amount of medium term notes of Pembina issued March 26, 2018. See " Description of the Capital Structure of Pembina – Medium Term Notes ";

" Medium Term Notes, Series 11 " means the $300 million aggregate principal amount of medium term notes of Pembina issued March 26, 2018. See " Description of the Capital Structure of Pembina – Medium Term Notes ";

" Mitsue Pipeline " means the pipeline system and related facilities delivering condensate from Whitecourt, Alberta to Utikuma, Alberta for use as diluent for heavy oil;

" MTN Prospectus " means the final short form base shelf prospectus filed with the securities commissions or similar regulatory authorities in each of the provinces of Canada on July 27, 2017 allowing Pembina to offer and issue, from time to time, medium term notes (the " 2017 Medium Term Notes ") of Pembina of up to $3,000,000,000 aggregate principal amount or, if offered at an original issue discount, aggregate offering price, of 2017 Medium Term Notes (or the equivalent thereof in one or more foreign currencies or composite currencies, including U.S. dollars) during the 25 month period that the MTN Prospectus is valid, which 2017 Medium Term Notes may be offered at rates of interest, prices and on terms to be determined based on market conditions at the time of the sale and set forth in one or more shelf prospectus supplement or pricing supplements;

" Musreau I " means the Musreau A, Musreau C and Musreau D trains, shallow cut sweet gas processing facility, owned 100 percent by Pembina, and Pembina's 50 percent interest in the Musreau B train, located at 04-25-062-06 W6M;

" Musreau II " means Pembina's 100 MMcf/d shallow cut sweet gas processing plant and associated NGL and gas gathering pipelines near Musreau I;

" Musreau III " means Pembina’s 100 MMcf/d shallow cut sweet gas processing facility near Musreau I and II;

" Musreau Deep Cut " means the 205 MMcf/d NGL extraction facility and related 10 km NGL sales pipeline connected to the Peace Pipeline and located at the Musreau I facility;

" NEB " means the National Energy Board;

" NEBC Expansion " means Pembina’s expansion to its pipeline infrastructure in northeastern British Columbia increasing the capacity of the NEBC Pipeline by approximately 75 Mbpd;

" NEBC Pipeline " means the pipeline system and related facilities, as expanded by the NEBC Expansion, delivering crude oil and condensate from northeastern British Columbia to Taylor, British Columbia;

" NGL " means natural gas liquids, including ethane, propane, butane and condensate;

" Nipisi Pipeline " means the pipeline system and related facilities delivering blended heavy oil from Utikuma, Alberta to Edmonton, Alberta;

" North Central Liquids Hub " has the meaning ascribed thereto under " General Developments of Pembina – Developments in 2017 ";

" Northern Pipeline " means the pipeline system and related facilities delivering NGL from Belloy, Alberta to Fort Saskatchewan, Alberta;

" Northwest Pipeline " means the pipeline system and related facilities delivering crude oil from northeastern British Columbia to Boundary Lake, Alberta;

" NWRP " has the meaning ascribed thereto under the heading " Description of Pembina's Business and Operations – Overview of Pembina’s Business – Facilities Division – NGL Services ";

" NYSE " means the New York Stock Exchange;

" OMS " has the meaning ascribed thereto under the heading " Other Information Relating to Pembina's Business – Operating Management System ";

" Option Plan " means the stock option plan of Pembina approved by the Shareholders on May 26, 2011, as amended effective November 30, 2016;

" PDH/PP Facility " has the meaning ascribed thereto under " General Developments of Pembina – Developments in 2018 ";

" Peace Pipeline " means the pipeline system and related facilities delivering light crude oil, condensate, propane mix (C ₃ +) and ethane mix (C ₂ +) from northwestern Alberta to Edmonton, Alberta and to Fort Saskatchewan, Alberta;

" PEIMP " means the Pressure Equipment Integrity Management Program;

" Pembina Medium Term Notes " means, collectively, the Medium Term Notes, Series 1, the Medium Term Notes, Series 2, the Medium Term Notes, Series 3, the Medium Term Notes, Series 4, the Medium Term Notes, Series 5, the Medium Term Notes, Series 6, the Medium Term Notes, Series 7, the Medium Term Notes, Series 8, the Medium Term Notes, Series 9, the Medium Term Notes, Series 10 and the Medium Term Notes, Series 11;

" Pembina Note Indenture " means the indenture dated March 29, 2011 between Pembina, Pouce Coupé Pipe Line Ltd., Plateau Pipe Line Ltd., Alberta Oil Sands Pipeline Ltd., Pembina Pipeline (an Alberta partnership), Pembina North Limited Partnership, Pembina West Limited Partnership, Pembina Oil Sands Pipeline L.P., Pembina Marketing Ltd., Pembina Midstream Limited Partnership, Pembina Gas Services Ltd., Pembina Gas Services Limited Partnership and Computershare Trust Company of Canada, as supplemented by the first supplemental note indenture dated April 2, 2012 between Pembina, Pembina NGL Corporation, 1598313 Alberta Ltd., Provident Infrastructure and Logistics LP, Provident Midstream Holdings GP ULC, Provident Midstream Inc., Provident GP Inc., Provident Facilities (NGL) Ltd., Provident Facilities (NGL) L.P., 1195714 Alberta Ltd., 1444767 Alberta Ltd., Provident Energy Pipeline Inc., Empress NGL Partnership, Kinetic Resources (LPG), Pro Holding Company, Provident Midstream (USA) Inc., Pro US LLC, Pro Midstream Company, Kinetic Resources (U.S.A.), Pro GP Corp., Pro LP Corp., Terraquest, Inc. and Computershare Trust Company of Canada, as further supplemented by the second supplemental note indenture dated October 24, 2014 among Pembina, Pembina Prairie Facilities Ltd., Pembina Prairie Facilities Holdco Ltd. and Computershare Trust Company of Canada, and as further supplemented by the third supplemental indenture dated April 4, 2018 between Pembina and Computershare Trust Company of Canada providing for the issuance of the Pembina Medium Term Notes and the AEGS Notes;

" Phase III Expansion " means pipeline expansions, underpinned by long-term, fee-for-service agreements in Pembina's operating areas, following and expanding on certain segments of Pembina's existing Northern and Peace Pipeline systems from Taylor, British Columbia southeast to Edmonton, Alberta increasing the capacity on the system by approximately 420 Mbpd;

" Phase IV Expansion " has the meaning ascribed thereto under " General Developments of Pembina – Developments in 2017 ";

" Phase V Expansion " has the meaning ascribed thereto under " General Developments of Pembina – Developments in 2017 ";

" Phase VI Expansion " has the meaning ascribed thereto under " General Developments of Pembina – Developments in 2018 ";

" Phase VII Expansion " has the meaning ascribed thereto under " General Developments of Pembina – Developments in 2018 ";

" Phase VIII Expansion " has the meaning ascribed thereto under " General Developments of Pembina – Developments in 2018 ";

" PHMSA " means the Pipeline and Hazardous Materials Safety Administration;

" PIC " means Petrochemical Industries Company K.S.C., a subsidiary of the Kuwait Petroleum Corporation, a company owned by the State of Kuwait;

" Plan " has the meaning ascribed thereto under the heading " Description of the Capital Structure of Pembina – Common Shares ";

" Plateau Pipeline " means the pipeline system delivering crude oil, condensate and HVP hydrocarbon products from Taylor, British Columbia to Dawson Creek, British Columbia;

" PMM " has the meaning ascribed thereto under the heading " Other Information Relating to Pembina's Business –Operations and Maintenance – Operator Qualification and Preventative Maintenance System ";

" Pouce Coupé Pipeline " means the pipeline system and related facilities delivering sweet crude oil and HVP hydrocarbon products from Dawson Creek, British Columbia to Pouce Coupé, Alberta;

" Premium Dividend™ " has the meaning ascribed thereto under " Description of the Capital Structure of Pembina – Premium Dividend™ and Dividend Reinvestment Plan ";

" Prince Rupert Terminal " has the meaning ascribed thereto under " General Developments of Pembina – Developments in 2017 " and " Description of Pembina’s Business and Operations – Overview of Pembina’s Business – Facilities Division – NGL Services ";

" Redemption Amount " has the meaning ascribed thereto under " Description of the Capital Structure of Pembina – Class B Preferred Shares ";

" Resthaven Expansion " means Pembina’s 100 MMcf/d (gross) expansion of its Resthaven Facility and the completion of a gas gathering pipeline to deliver gas into Resthaven;

" Resthaven Facility " has the meaning ascribed thereto under " Description of Pembina's Business and Operations –– Overview of Pembina’s Business – Facilities Division – Gas Services ";

" RFS " or " Redwater " has the meaning ascribed to it under " Description of Pembina’s Business and Operations – Facilities Division – NGL Services ".

" RFS I " means Pembina's 73 Mbpd NGL fractionator at Redwater, Alberta;

" RFS II " means Pembina's second 73 Mbpd NGL fractionator at Redwater, Alberta;

" RFS III " means Pembina's 55 Mbpd propane-plus fractionator at Redwater, Alberta;

" Ruby Pipeline " means a gas transmission pipeline that runs from the Opal hub in Wyoming to the Malin hub in Oregon;

" S&P " means Standard & Poor's Rating Services, a division of The McGraw-Hill Companies;

" Saturn I " means Pembina's deep cut NGL extraction facility located in the Berland area of Alberta with 200 MMcf/d of extraction capacity;

" Saturn II " means Pembina's second deep cut NGL extraction facility in the Berland area, a twin of Saturn I;

" Saturn Complex " has the meaning ascribed thereto under " Description of Pembina's Business and Operations – Overview of Pembina’s Business – Facilities Division – Gas Services ";

" Saturn Phase II Plant " means Veresen Midstream’s 200 MMcf/d gross gas processing facility in the Montney region;

" SCADA " means supervisory control and data acquisition. See " Other Information Relating to Pembina's Business – Information and Communication Systems ";

" SEC " means the United States Securities and Exchange Commission;

" SEDAR " means the System for Electronic Document Analysis and Retrieval;

" SEEP " has the meaning ascribed thereto under " Description of Pembina's Business and Operations – Overview of Pembina’s Business – Facilities Division – Gas Services ";

" Series 1 Class A Preferred Shares " means the cumulative redeemable rate reset Class A Preferred Shares, series 1 of Pembina, issued July 26, 2013. See " Description of the Capital Structure of Pembina – Class A Preferred Shares ";

" Series 2 Class A Preferred Shares " means the cumulative redeemable floating rate Class A Preferred Shares, series 2 of Pembina, issuable on conversion of the Series 1 Class A Preferred Shares. See " Description of the Capital Structure of Pembina – Class A Preferred Shares ";

" Series 3 Class A Preferred Shares " means the cumulative redeemable rate reset Class A Preferred Shares, series 3 of Pembina, issued October 2, 2013. See " Description of the Capital Structure of Pembina – Class A Preferred Shares ";

" Series 4 Class A Preferred Shares " means the cumulative redeemable floating rate Class A Preferred Shares, series 4 of Pembina, issuable on conversion of the Series 3 Class A Preferred Shares. See " Description of the Capital Structure of Pembina – Class A Preferred Shares ";

" Series 5 Class A Preferred Shares " means the cumulative redeemable rate reset Class A Preferred Shares, series 5 of Pembina, issued January 16, 2014. See " Description of the Capital Structure of Pembina – Class A Preferred Shares ";

" Series 6 Class A Preferred Shares " means the cumulative redeemable floating rate Class A Preferred Shares, series 6 of Pembina, issuable on conversion of the Series 5 Class A Preferred Shares. See " Description of the Capital Structure of Pembina – Class A Preferred Shares ";

" Series 7 Class A Preferred Shares " means the cumulative redeemable rate reset Class A Preferred Shares, series 7 of Pembina, issued September 11, 2014. See " Description of the Capital Structure of Pembina – Class A Preferred Shares ";

" Series 8 Class A Preferred Shares " means the cumulative redeemable floating rate Class A Preferred Shares, series 8 of Pembina, issuable on conversion of the Series 7 Class A Preferred Shares. See " Description of the Capital Structure of Pembina – Class A Preferred Shares ";

" Series 9 Class A Preferred Shares " means the cumulative redeemable rate reset Class A Preferred Shares, series 9 of Pembina, issued April 10, 2015. See " Description of the Capital Structure of Pembina – Class A Preferred Shares ";

" Series 10 Class A Preferred Shares " means the cumulative redeemable floating rate Class A Preferred Shares, series 10 of Pembina, issuable on conversion of the Series 9 Class A Preferred Shares. See " Description of the Capital Structure of Pembina – Class A Preferred Shares ";

" Series 11 Class A Preferred Shares " means the cumulative redeemable minimum rate reset Class A Preferred Shares, series 11 of Pembina, issued January 15, 2016. See " Description of the Capital Structure of Pembina – Class A Preferred Shares ";

" Series 12 Class A Preferred Shares " means the cumulative redeemable floating rate Class A Preferred Shares, series 12 of Pembina, issuable on conversion of the Series 11 Class A Preferred Shares. See " Description of the Capital Structure of Pembina – Class A Preferred Shares ";

" Series 13 Class A Preferred Shares " means the cumulative redeemable minimum rate reset Class A Preferred Shares, series 13 of Pembina, issued April 27, 2016. See " Description of the Capital Structure of Pembina – Class A Preferred Shares ";

" Series 14 Class A Preferred Shares " means the cumulative redeemable floating rate Class A Preferred Shares, series 14 of Pembina, issuable on conversion of the Series 13 Class A Preferred Shares. See " Description of the Capital Structure of Pembina – Class A Preferred Shares ";

" Series 15 Class A Preferred Shares " means the cumulative redeemable rate reset Class A Preferred Shares, series 15 of Pembina, issued in exchange for the Veresen Series A Preferred Shares on October 2, 2017. See " Description of the Capital Structure of Pembina – Class A Preferred Shares ";

" Series 16 Class A Preferred Shares " means the cumulative redeemable floating rate Class A Preferred Shares, series 16 of Pembina, issuable on conversion of the Series 15 Class A Preferred Shares. See " Description of the Capital Structure of Pembina – Class A Preferred Shares ";

" Series 17 Class A Preferred Shares " means the cumulative redeemable rate reset Class A Preferred Shares, series 17 of Pembina, issued in exchange for the Veresen Series C Preferred Shares on October 2, 2017. See " Description of the Capital Structure of Pembina – Class A Preferred Shares ";

" Series 18 Class A Preferred Shares " means the cumulative redeemable floating rate Class A Preferred Shares, series 18 of Pembina, issuable on conversion of the Series 17 Class A Preferred Shares. See " Description of the Capital Structure of Pembina – Class A Preferred Shares ";

" Series 19 Class A Preferred Shares " means the cumulative redeemable rate reset Class A Preferred Shares, series 19 of Pembina, issued in exchange for the Veresen Series E Preferred Shares on October 2, 2017. See " Description of the Capital Structure of Pembina – Class A Preferred Shares ";

" Series 20 Class A Preferred Shares " means the cumulative redeemable floating rate Class A Preferred Shares, series 20 of Pembina, issuable on conversion of the Series 19 Class A Preferred Shares. See " Description of the Capital Structure of Pembina – Class A Preferred Shares ";

" Series 21 Class A Preferred Shares " means the cumulative redeemable minimum rate reset Class A Preferred Shares, series 21 of Pembina, issued December 7, 2017. See " Description of the Capital Structure of Pembina – Class A Preferred Shares ";

" Series 22 Class A Preferred Shares " means the cumulative redeemable floating rate Class A Preferred Shares, series 22 of Pembina, issuable on conversion of the Series 21 Class A Preferred Shares. See " Description of the Capital Structure of Pembina – Class A Preferred Shares ";

" Series A Senior Notes " has the meaning ascribed thereto under " Description of the Capital Structure of Pembina – Other Debt ";

" Series C Senior Notes " has the meaning ascribed thereto under " Description of the Capital Structure of Pembina – Other Debt ";

" Series D Senior Notes " has the meaning ascribed thereto under " Description of the Capital Structure of Pembina – Other Debt ";

" Series F Convertible Debentures " means the 5.75 percent convertible unsecured subordinated debentures issued by Provident Energy Ltd. on April 29, 2011 and assumed by Pembina in April 2012, which matured on December 31, 2018;

" shallow cut " means sweet gas processing with propane and/or condensate-plus extraction capabilities;

" Shareholders " means the holders of Common Shares;

" SMP " has the meaning ascribed thereto under the heading " Other Information Relating to Pembina's Business –Security Management Program ";

" Sunrise Plant " means Veresen Midstream’s 400 MMcf/d gross gas plant in the Montney region;

" Syncrude Pipeline " means the pipeline system and related facilities delivering synthetic crude oil from the Syncrude Project into the Edmonton, Alberta area;

" Syncrude Project " means the joint venture that was formed for the recovery of oil sands, crude bitumen or products derived from the Athabasca oil sands, located near Fort McMurray, Alberta;

" take-or-pay " has the meaning ascribed thereto under " Description of Pembina’s Business and Operations – Overview of Pembina’s Business – Pipelines Division – Conventional Pipelines – Firm Contracts ";

" Taylor to Belloy Pipeline " means the pipeline and related facilities delivering NGL from Taylor, British Columbia to Belloy, Alberta;

" Taylor to Boundary Lake Pipeline " means the pipeline and related facilities delivering sweet HVP hydrocarbon products from Taylor, British Columbia to Boundary Lake, Alberta;

" throughput " means volume of product delivered through a pipeline;

" Tower Liquids Hub " means Veresen Midstream’s liquids handling facility located near the Sunrise, Tower and Saturn Phase II Plants;

" Tower Plant " means Veresen Midstream’s 200 MMcf/d gross rich gas processing complex in the Montney region;

" TSX " means the Toronto Stock Exchange;

" Vantage Expansion " has the meaning ascribed thereto under " General Developments of Pembina – Developments in 2016 ";

" Vantage Pipeline " means the HVP pipeline that links ethane from the North Dakota Bakken play to the petrochemical market in Alberta, originating from a large-scale gas plant in Tioga, North Dakota extending approximately northwest through Saskatchewan and terminating near Empress, Alberta, where it is connected to the AEGS;

" Veresen " means Veresen Inc.;

" Veresen Acquisition " has the meaning ascribed thereto under " General Developments of Pembina – Developments in 2017 ";

" Veresen Common Shares " has the meaning ascribed thereto under " General Developments of Pembina – Developments in 2017 ";

" Veresen Medium Term Note Indenture " means the trust indenture dated November 22, 2011 between Veresen and Computershare Trust Company of Canada, as supplemented by the first supplemental note indenture dated March 14, 2012 between Veresen and Computershare Trust Company of Canada, as further supplemented by the second supplemental note indenture dated June 13, 2014 between Veresen and Computershare Trust Company of Canada, and as further supplemented by the third supplemental note indenture dated November 10, 2016 between Veresen and Computershare Trust Company of Canada, providing for the issuance of the Veresen Medium Term Notes;

" Veresen Medium Term Notes, Series 1 " means the $150 million aggregate principal amount of medium term notes of Veresen issued November 22, 2011 and assumed by Pembina on October 2, 2017. See " Description of the Capital Structure of Pembina – Medium Term Notes ";

" Veresen Medium Term Notes, Series 3 " means the $50 million aggregate principal amount of medium term notes of Veresen issued March 14, 2012 and assumed by Pembina on October 2, 2017. See " Description of the Capital Structure of Pembina – Medium Term Notes ";

" Veresen Medium Term Notes, Series 4 " means the $200 million aggregate principal amount of medium term notes of Veresen issued June 13, 2014 and assumed by Pembina on October 2, 2017. See " Description of the Capital Structure of Pembina – Medium Term Notes ";

" Veresen Medium Term Notes, Series 5 " means the $350 million aggregate principal amount of medium term notes of Veresen issued November 7, 2016 and assumed by Pembina on October 2, 2017. See " Description of the Capital Structure of Pembina – Medium Term Notes ";

" Veresen Medium Term Notes " means, collectively, the Veresen Medium Term Notes, Series 1, the Veresen Medium Term Notes, Series 3, the Veresen Medium Term Notes, Series 4 and the Veresen Medium Term Notes, Series 5;

" Veresen Midstream " means Veresen Midstream Limited Partnership, a limited partnership owned by a wholly-owned subsidiary of Pembina and affiliates of Kohlberg Kravis Roberts & Co. L.P.;

" Veresen Preferred Shares " means the Veresen Series A Preferred Shares, the Veresen Series B Preferred Shares, the Veresen Series C Preferred Shares, the Veresen Series D Preferred Shares, the Veresen Series E Preferred Shares and the Veresen Series F Preferred Shares;

" Veresen Series A Preferred Shares " means the cumulative redeemable preferred shares, series A of Veresen, issued February 14, 2012;

" Veresen Series B Preferred Shares " means the cumulative redeemable preferred shares, series B of Veresen, which were issuable on conversion of the Veresen Series A Preferred Shares;

" Veresen Series C Preferred Shares " means the cumulative redeemable preferred shares, series C of Veresen, issued October 21, 2013;

" Veresen Series D Preferred Shares " means the cumulative redeemable preferred shares, series D of Veresen, which were issuable on conversion of the Veresen Series C Preferred Shares;

" Veresen Series E Preferred Shares " means the cumulative redeemable preferred shares, series E of Veresen, issued April 1, 2015;

" Veresen Series F Preferred Shares " means the cumulative redeemable preferred shares, series F of Veresen, which were issuable on conversion of the Veresen Series E Preferred Shares;

" WCSB " means the Western Canadian Sedimentary Basin;

" Western Pipeline " means the pipeline system and related facilities delivering crude oil from Taylor, British Columbia to Prince George, British Columbia;

" Williams Pipeline " has the meaning ascribed thereto under " Description of Pembina's Business and Operations – Overview of Pembina’s Business –Pipelines Division – Transmission Pipelines "; and

" Younger " has the meaning ascribed thereto under " Description of Pembina's Business and Operations – Overview of Pembina’s Business – Facilities Division – NGL Services ".

All dollar amounts set forth in this Annual Information Form are in Canadian dollars unless otherwise indicated. References to "$" or "C$" are to Canadian dollars and references to "US$" are to U.S. dollars. On February 20, 2019, the daily exchange rate reported by the Bank of Canada, was C$1.00 equals US$0.7594.

Except where otherwise indicated, all information in this Annual Information Form is presented as at the end of Pembina's most recently completed financial year, being December 31, 2018.

A reference made in this Annual Information Form to other documents or to information or documents available on a website does not constitute the incorporation by reference into this Annual Information Form of such other documents or such other information or documents available on such website, unless otherwise stated.

Barrels of oil equivalent (" boe ") may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf of natural gas: 1 bbl of crude oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

The following table sets forth certain standard conversions between Standard Imperial Units and the International System of Units (or metric units).

NON–GAAP MEASURES

Pembina's Financial Statements, which may be found on Pembina's profile on the SEDAR website at www.sedar.com, and in Pembina's annual report on Form 40-F filed on Pembina's profile on the EDGAR website at www.sec.gov, are presented in compliance with IFRS. Certain financial information included in such Financial Statements is contained or incorporated by reference within this Annual Information Form.

Readers should take note, however, that within this Annual Information Form, terms are used by management to evaluate the performance of Pembina and its businesses that are not defined by GAAP. Since non-GAAP measures do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies, securities regulations require that non-GAAP measures be clearly defined, qualified and reconciled to their nearest GAAP measure. These non-GAAP measures are calculated and disclosed on a consistent basis from period to period. Specific adjusting items may only be relevant in certain periods; however, prior periods have not been restated as there is no significant impact.

The intent of non-GAAP measures is to provide additional useful information with respect to Pembina's operational and financial performance to investors and analysts, though the measures do not have any standardized meaning under IFRS. The measures should not, therefore, be considered in isolation or used in substitute for measures of performance prepared in accordance with IFRS. Other issuers may calculate these non-GAAP measures differently or use different non-GAAP measures.

In particular, in this Annual Information Form, the terms "net revenue" and "operating margin" are used to describe certain financial information of Pembina. Readers should be cautioned that net revenue and operating margin are not defined by GAAP and are included in this Annual Information Form to describe certain financial information of Pembina and should not be construed as alternatives to revenue, earnings, gross profit, or other measures of financial results determined in accordance with GAAP as indicators of Pembina's performance.

" Net revenue " is a non-GAAP financial measure which is defined as total revenue less cost of goods sold including product purchases. Management believes that net revenue provides investors with a single measure to indicate the margin on sales before non-product operating expenses that is comparable between periods. Management utilizes net revenue to compare consecutive results in the Marketing & New Ventures Division and the Facilities Division and to aggregate revenue generated by each of Pembina's Divisions and to set comparable objectives.

" Operating margin " is a non-GAAP financial measure which is defined as gross profit on a proportionately consolidated basis before depreciation and amortization included in operations and unrealized gain/loss on commodity-related derivative financial instruments from assets directly held and proportionate interest in operating margin from equity accounted investees. Pembina's proportionate share of results from investments in equity accounted investees with a preferred distribution is presented in operating margin as a 50 percent common interest. Management believes that operating margin provides useful information to investors for assessing the financial performance of the Company's operations and equity investments. Management utilizes operating margin in setting objectives and views it as a key performance indicator of the Company's success.

For more information with respect to financial measures which have not been defined by GAAP, including reconciliations to the most directly comparable GAAP measure, see the " Non–GAAP Measures " section of the MD&A and " Investments in Equity Accounted Investees " section of the unaudited supplementary information dated February 21, 2019 and posted on Pembina’s website at www.pembina.com, which sections are incorporated by reference herein.

FORWARD-LOOKING STATEMENTS AND INFORMATION

Certain statements contained in this Annual Information Form constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of applicable Canadian securities legislation (collectively, " forward-looking statements "). All forward-looking statements are based on Pembina's current expectations, estimates, projections, beliefs, judgments and assumptions based on information available at the time the applicable forward-looking statement was made and in light of Pembina’s experience and its perception of historical trends. Forward-looking statements are typically identified by words such as "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "could", "would", "believe", "plan", "intend", "design", "target", "undertake", "view", "indicate", "maintain", "explore", "entail", "schedule", "objective", "strategy", "likely", "potential", "outlook", "aim", "propose", "goal", and similar expressions suggesting future events or future performance.

By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Pembina believes the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this Annual Information Form should not be unduly relied upon. The forward-looking statements included herein speak only as of the date of the Annual Information Form.

In particular, this Annual Information Form contains forward-looking statements pertaining to, among other things, the following:

Various factors or assumptions are typically applied by Pembina in drawing conclusions or making the forecasts, projections, predictions or estimations set out in forward-looking statements based on information currently available to Pembina. These factors and assumptions include, but are not limited to:

The actual results of Pembina could differ materially from those anticipated in the forward-looking statements included in this Annual Information Form as a result of the material risk factors set forth below:

These factors should not be construed as exhaustive. Unless required by law, Pembina does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Any forward-looking statements contained herein are expressly qualified by this cautionary statement.

CORPORATE STRUCTURE

Name, Address and Formation

Pembina Pipeline Corporation is a corporation amalgamated under the ABCA. It is the successor to Pembina Pipeline Income Fund (the "Fund") following the completion of the reorganization of the Fund from an income trust structure to a corporate structure by way of plan of arrangement involving the Fund, Pembina and the holders of the Fund's trust units, pursuant to which the trust was reorganized into Pembina on October 1, 2010. Pembina is also the successor to Veresen following the completion of the Veresen Acquisition on October 2, 2017, whereby, among other things, Pembina amalgamated with Veresen and the resulting entity continued as "Pembina Pipeline Corporation". Pembina's principal and registered office is located at Suite 4000, 585 - 8th Avenue S.W., Calgary, Alberta, T2P 1G1.

Pembina's Subsidiaries

The following chart indicates Pembina's material subsidiaries, including their jurisdictions of incorporation, formation or organization and the percentage of voting securities owned, or controlled or directed, directly or indirectly, by Pembina or its subsidiaries.

Amended Articles

On May 13, 2013, Pembina filed articles of amendment under the ABCA to create a new class of shares, the Class A Preferred Shares, to change the designation and terms of the Class B Preferred Shares, and to increase the maximum number of directors of Pembina from eleven to thirteen, after receiving Shareholder approval for such amendments.

On October 2, 2017, Pembina filed articles of amendment under the ABCA to create the Series 15, Series 16, Series 17, Series 18, Series 19 and Series 20 Class A Preferred Shares.

On October 2, 2017, Pembina filed articles of amalgamation under the ABCA to effect the amalgamation of Pembina and Veresen pursuant to the Veresen Acquisition. Pursuant to the Veresen Acquisition, all of the outstanding Veresen Series A, C and E Preferred Shares were exchanged for Series 15, 17 and 19 Class A Preferred Shares, respectively. The Series 15, 17 and 19 Class A Preferred Shares have substantially the same terms and conditions as the previously outstanding Veresen Series A, C and E Preferred Shares. The Series 16, 18 and 20 Class A Preferred Shares have substantially the same terms and conditions as the Veresen Series B, D and F Preferred Shares.

On December 1, 2017, Pembina filed articles of amendment under the ABCA to create the Series 21 and Series 22 Class A Preferred Shares.

Developments to date in 2019

DESCRIPTION OF PEMBINA'S BUSINESS AND OPERATIONS

Pembina's Business Objective and Strategy

Pembina strives to provide sustainable, industry-leading total returns for our investors; reliable and value-added services for our customers; a net positive impact to communities; and a safe, respectful, collaborative and fair work culture for our employees. The Company expects that it will successfully achieve this vision if:

Pembina's strategy is to:

Overview of Pembina's Business

There are three general sectors in the oil and gas industry: upstream, midstream and downstream. The upstream sector encompasses exploration for, and production of, hydrocarbon liquids in their raw forms. In the midstream sector, hydrocarbon products are gathered, processed, transported and marketed to the downstream sector. The downstream sector consists of refiners, end-use customers, local distributers and wholesalers.

Pembina is a leading transportation and midstream service provider that has been serving North America's energy industry for over 60 years. Pembina owns an integrated system of pipelines that transport various hydrocarbon liquids and natural gas products

produced primarily in western Canada. The Company also owns natural gas gathering and processing facilities and an oil and natural gas liquids infrastructure and logistics business. Pembina's integrated assets and commercial operations along the majority of the hydrocarbon value chain allow it to offer a full spectrum of midstream and marketing services to the energy sector. Pembina is committed to identifying additional opportunities to connect hydrocarbon production to new demand locations through the development of infrastructure that would extend Pembina's service offering even further along the hydrocarbon value chain. These new developments will contribute to ensuring that hydrocarbons produced in the WCSB and the other basins where Pembina operates can reach the highest value markets throughout the world.

Pembina is structured into three divisions: Pipelines Division, Facilities Division and Marketing & New Ventures Division; which are described in their respective sections of this Annual Information Form.

The operating margin in 2018 from each of Pembina's three divisions was as follows:

The following map illustrates Pembina's primary assets:

The following table sets forth certain financial and operating highlights for 2018 and 2017 .

Financial and Operating Highlights

(in $ millions unless otherwise noted)

180 mboe/d, respectively.

Further discussion of operational results and new developments for Pembina's business segments for the years ended December 31, 2018 and 2017 is contained in the section "Segment Results" in the MD&A, which section is incorporated by reference herein.

Pipelines Division

Overview

The Pipelines Division includes liquids and natural gas pipelines with a total capacity of approximately 3 mmboe/d serving various markets and basins across North America. The Pipelines Division is comprised of Pembina's conventional, transmission and oil sands and heavy oil pipeline assets. The primary objectives of the Pipelines Division are to provide safe, responsible, reliable and cost-effective transportation services for customers; pursue opportunities for increased throughput; maintain and grow sustainable operating margin on invested capital by capturing incremental volumes; provide solutions to our customers; grow revenue; and follow a disciplined approach to operating expenses.

Conventional Pipelines

Pembina's conventional pipeline assets comprise a strategically located network of pipelines and related infrastructure including various hubs and terminals. This network transports crude oil, condensate and NGL across much of Alberta and parts of British Columbia. Pembina's primary conventional pipeline assets include the following:

Pembina continues to experience growing customer demand for transportation services to support development of the Montney resource play and is currently constructing three additional expansions of the Peace Pipeline:

The Phase VI Expansion, which includes upgrades at Gordondale, Alberta, a 16-inch pipeline from the La Glace pump station to the Wapiti pump station, Alberta and associated pump station and terminal upgrades, and a 20-inch pipeline from the Kakwa pump station to the Lator pump station, Alberta. The expansion is anticipated to be placed into service in the second half of 2019, subject to environmental and regulatory approval.

The Phase VII Expansion, which includes a new 20-inch, approximately 220-kilometer pipeline in the La Glace-Valleyview-Fox Creek corridor, as well as six new pump stations or terminal upgrades, between La Glace and Edmonton, Alberta. Phase VII will add approximately 240,000 bpd of incremental capacity upstream of Fox Creek, accessing capacity available on the mainlines downstream of Fox Creek. Phase VII is anticipated to be in service in the first half of 2021, subject to environmental and regulatory approvals.

The Phase VIII Expansion, which will include new 10-inch and 16-inch pipelines in the Gordondale pump station to the La Glace pump station corridor of Alberta, as well as six new pump stations or terminal upgrades located between Gordondale and Fox Creek, Alberta. Phase VIII will enable segregated pipeline service for ethane-plus and propane-plus NGL mix from the central Montney area near Gordondale, Alberta into the Edmonton area for market delivery. Phase VIII is anticipated to be placed into service in stages starting in 2020 through the first half of 2022, subject to regulatory and environmental approvals.

Once Phase VII is complete, Pembina will have 1.1 million bpd of Edmonton area market delivery capacity across the Peace Pipeline and Northern Pipeline systems.  Pembina's ultimate vision is to have at least four segregated product pipelines in the corridors between Gordondale, Alberta and the Edmonton area, maximizing Pembina's fully powered-up capacity of 1.3 million bpd on the Peace Pipeline and Northern Pipeline;

There are approximately 65 shippers on the conventional pipeline systems owned and operated by Pembina. The primary delivery points for hydrocarbon products from Pembina include: the Enbridge pipeline systems for multiple products; the Kinder Morgan North 40 terminal and the Trans Mountain pipeline system at Edmonton, Alberta; the Strathcona refinery in the Edmonton area; Pembina's CDH near Fort Saskatchewan, Alberta; the Husky Energy Prince George, British Columbia refinery; AEGS and all major NGL fractionators near Fort Saskatchewan, Alberta. No single customer on the Peace Pipeline system represented more than 10 percent of the revenues for the year ended December 31, 2018. The ten largest customers represented approximately 52 percent of the revenues.

Pembina's crude oil terminals are configured to access and provide services for the common grades of Canadian crude oil as well as access domestic and imported condensate streams. The terminals provide essential services for Pembina's customers with outbound delivery flexibility and above ground storage.

At Pembina's truck terminals, the Company's customer base generally comprises the same group who seek to transport various product volumes, including condensate, on Pembina's conventional and oil sands and heavy oil systems. Truck terminals are particularly attractive to those producers who are unable to justify pipeline/oil battery connections due to relatively low daily production or are producing in advance of being pipeline connected.

The contracts related to conventional pipeline assets are fee-for-service in nature, but vary in their structure as follows:

Non-Firm Contracts: Capacity on conventional pipelines that has not been secured under the " Firm Contracts" structure described below is contracted under fee-for-service, evergreen-style, month-to-month contracts on an interruptible basis that allow Pembina to adjust tolls for actual volumes, operating expenses and capital expenditures on a periodic basis. These contracts do not require Pembina to guarantee a specified amount of dedicated pipeline capacity for a customer. Rather, customers nominate volumes on a monthly basis and tariffs are set periodically by receipt point.

Cost of Service: Pembina's conventional pipelines in British Columbia are operated under a cost-of-service methodology whereby Pembina is able to flow through the actual operating costs of the systems to shippers while recovering an acceptable return on invested capital; however, there is no firm volume commitment under any of these long-term, cost-of-service agreements as would be typical in a cost-of-service agreement.

Firm Contracts: Since 2012, Pembina has focused on securing base volumes on its Peace Pipeline and Northern Pipeline systems under a firm contract structure, where a fee-for-service toll (which includes flow-through operating costs for power and extraordinary events) is set under the contract and customers receive a firm amount of pipeline capacity for the transportation of their product. Under firm contracts, customers also agree to a minimum volume or revenue commitment (" take-or-pay ").

Through this process, the significant majority of crude oil, condensate and NGL product transported on the Peace Pipeline and Northern Pipeline systems is contracted under long-term, take-or-pay agreements that provide customers with firm-service in exchange for a minimum revenue requirement.

Services provided on other assets and systems such as the Drayton Valley Pipeline, LGS, Brazeau Pipeline, CDH, and ENT are generally contracted on a 30-day evergreen basis and services are provided on an interruptible basis.

Competition among existing crude oil, condensate and NGL pipelines is based primarily on the cost of transportation, access to supply, the quality and reliability of service, contract carrier alternatives, and proximity and access to markets.

Pembina's conventional pipelines are feeder pipelines that move products in the field, from batteries, processing facilities and storage tanks, to facilities, markets and export pipelines primarily in the Edmonton and Fort Saskatchewan, Alberta area as outlined above. Given that the majority of Pembina's conventional pipelines are connected to existing oil batteries and infrastructure, existing volumes generally remain connected to the pipeline system until it is uneconomical to provide pipeline

transportation services, usually due to low volume, in which case the connection may be discontinued, and the producer may truck volumes to an alternate delivery point. With Pembina's track record of safe, reliable and cost-effective operations, service tenure, the complex nature of its systems and high levels of customer service, it is difficult for a competitor to replicate the high-value service offering that Pembina provides.

Unlike connected facilities, unconnected volumes of product are typically trucked to the most cost-effective truck unloading facility, and there is direct competition from numerous service providers serving the same area. Most volumes that are trucked are either from locations that are too far away to obtain economic pipeline service or have volumes too small to make a pipeline connection economically viable. Typically, a producer's selection of a truck terminal is only partially based on tolls; often, it is also based on whether the volumes need some form of treatment to meet pipeline specifications, as well as arbitrage opportunities associated with the product. Pembina owns truck terminals to assist in aggregating unconnected volumes onto its systems. There are several other pipelines and terminal operators which compete for trucked volumes in Pembina's operating areas. Competition for these volumes include local market fractionators for NGL, as well as the Rangeland and Rainbow pipelines, rail and numerous other pipelines connected to terminal operations for crude oil and condensate.

Producer activity focused on NGL development continues in the Deep Basin Cretaceous, Montney and Duvernay resource areas served by Pembina's Peace Pipeline and Northern Pipeline systems. Pembina has successfully been able to leverage its existing assets to provide incremental capacity in these areas, as evidenced by Pembina's numerous pipeline expansion projects.

Oil Sands and Heavy Oil Pipelines

Pembina plays an important role in supporting Alberta's oil sands and heavy oil industry. Pembina operates oil sands and heavy oil pipelines with contracted capacity of approximately 1.1 mmbpd.

Pembina's primary oil sands assets include the following:

The major shippers on Pembina's oil sands and heavy oil pipelines are primarily large upstream exploration and production companies.

Pembina's oil sands assets provide services predominantly under long-term, extendible contracts, which allow for the flow-through of eligible operating expenses to customers. As a result, operating margin from these assets is primarily driven by the amount of capital invested and is predominantly not sensitive to fluctuations in certain operating expenses, actual throughput or commodity prices.

Pembina's Syncrude Pipeline is fully contracted under a cost-of-service, extendible, long-term agreement that expires no earlier than the end of 2035.

The Horizon Pipeline is fully contracted to a single customer and is operated under the terms of a 25-year fixed return contract, which expires in 2034.

Pembina's Cheecham Lateral is fully contracted to shippers under the terms of a 25-year fixed-return extendible agreement that expires in 2032.

The Nipisi and Mitsue Pipelines are contracted under 10-year fee-for-service agreements, with substantial take-or-pay components, which commenced in 2011. These contracts also have extension and expansion rights.

The Swan Hills pipeline is utilized by various shippers who transport mainly on an interruptible toll basis.

While regional delivery infrastructure capacity is sufficient for current production levels, the primary focus of infrastructure development is expected to be on accessing markets outside of Alberta for the majority of bitumen and heavy oil blend produced in Alberta. In the long term, expansions of existing condensate and synthetic crude diluent supply infrastructure, as well as blended bitumen and heavy oil pipeline delivery systems, may be required depending on the rate at which oil sands and heavy oil may be produced in the future. See "Risk Factors – Risks Inherent in Pembina’s Business – Reserve Replacement, Throughput and Product Demand."

Given the long-term nature of oil sands and heavy oil investments, most pipelines serving existing production are underpinned by long-term transportation agreements. Competition primarily arises with respect to incremental supply that requires additional pipeline capacity. In some cases, existing pipeline companies have under-utilized assets which can be re-purposed to suit a customer's needs, giving them a competitive advantage when competing for new projects. In other cases, where construction of significant new infrastructure is required, pipeline companies compete for these opportunities based primarily on their operating expertise, cost of capital and commercial flexibility.

Transmission Pipelines

Pembina's transmission pipeline assets have developed through the strategic acquisition of key natural gas and specification ethane transportation infrastructure assets, positioned in some of the most prolific gas producing regions in western Canada and the United States. Pembina's transmission pipelines provide customers with access to premium markets primarily on a take-or-pay basis under extendible long-term contracts. Pembina's primary transmission pipeline assets include the Vantage Pipeline, AEGS, Alliance Pipeline and Ruby Pipeline.

Vantage Pipeline

The Vantage Pipeline includes an approximately 900 km, 69 Mbpd pipeline and gathering laterals that link a growing supply of ethane from the North Dakota Bakken play to the petrochemical market in Alberta, originating from a large-scale gas plant in Tioga, North Dakota extending northwest through Saskatchewan and terminating near Empress, Alberta, where it is connected to the AEGS.

Transportation service on the Vantage Pipeline is underpinned by long-term, fee-for-service contracts with take-or-pay provisions.  Currently, the Vantage Pipeline contracts are with one customer, with petrochemical infrastructure in Alberta, with multiple receipt points to the Vantage Pipeline system. Approximately 50 percent of the Vantage Pipeline’s capacity is contracted on a take-or-pay basis with additional volumes flowing on a fee-for-service basis.  Contract terms range from 10 to 20 years with current contracts expiring in the 2024-2034 timeframe.

Alberta Ethane Gathering System (AEGS)

AEGS transports ethane within Alberta from various ethane extraction plants to major petrochemical complexes located near Joffre and Fort Saskatchewan, Alberta. At 1,336 km in total length, and a capacity of approximately 330 Mbpd, AEGS is comprised of three legs that form an integrated system, which includes interconnections with underground storage sites in Fort Saskatchewan, Alberta and Burstall, Alberta.

The AEGS shipper community is currently comprised of shippers that are either major ethane producers or consumers that have substantive energy infrastructure and/or petrochemical investments in Alberta. Effective January 1, 2019, approximately 95 percent of the existing capacity on the system has been contracted under new 20-year take-or-pay agreements.

Alliance Pipeline

The Alliance Pipeline system is held through Alliance Canada and Alliance U.S., both of which are jointly owned by Pembina (50 percent) and Enbridge Inc. (50 percent).

The Alliance Pipeline system consists of a 3,849 km integrated Canadian and U.S. natural gas transmission pipeline, delivering rich natural gas from the WCSB and the Williston Basin in North Dakota to natural gas markets in Chicago, Illinois. The Alliance Pipeline system has been in commercial service since December 2000 and currently delivers an average of 1.6 bcf/d of rich gas. Rich gas is natural gas with relatively high NGL content including ethane, propane, butane and condensate. The Alliance Pipeline system connects with the Aux Sable NGL extraction facility in Channahon, Illinois, which extracts NGL from the natural gas transported before delivery to downstream pipelines. The pipeline connects in the Chicago area, through its downstream header, with five interstate natural gas pipelines and two local natural gas distribution systems, which provide shippers with access to natural gas markets in the Midwest, the Northeast, and the Gulf Coast of the U.S., and Eastern Canada. All shippers have signed extraction agreements that give Aux Sable the right to extract the NGL from the rich gas transported.

The Canadian portion of the Alliance Pipeline system consists of approximately 1,561 km of natural gas mainline pipeline and 732 km of related lateral pipelines connected to natural gas receipt locations, primarily at gas processing facilities in northwestern Alberta and northeastern British Columbia, and related infrastructure. Alliance Canada owns the Canadian portion of the Alliance Pipeline system.

The U.S. portion of the Alliance Pipeline system consists of approximately 1,556 kms of infrastructure including the 129 km Tioga Lateral in North Dakota. Alliance U.S., an affiliate of Alliance Canada, owns the U.S. portion of the Alliance Pipeline system.

Alliance Canada's natural gas transmission services, coupled with rich gas delivery capabilities, are designed to enable producers to maximize the value of their product. This provides significant competitive advantages which can include:

Alliance Canada has fully contracted its firm receipt service through 2020. Alliance Canada has 28 long-term firm shippers, and Alliance U.S. has 20 long-term firm shippers. The average daily firm contract capacity, including seasonal firm service with contract terms of one day to seven months, through the year contracted to the Canadian border is approximately 1.5 bcf/d and approximately 1.6 bcf/d from the U.S. border. In addition, Alliance Pipeline sells interruptible transportation service on a price-biddable basis.

No single permanent shipper represented more than 26 percent of the transportation revenues on the Alliance Pipeline for the year ended December 31, 2018. The ten largest shippers, in terms of transportation revenues, represented approximately 82 percent of the transportation revenues of Alliance Canada, and 84 percent of the transportation revenues of Alliance U.S. Owners, or affiliates of owners, of Alliance and Aux Sable accounted for approximately 16 percent of the transportation revenues on the Canadian segment of the Alliance Pipeline and 19 percent of the transportation revenues on the U.S. segment of the Alliance Pipeline for the year ended December 31, 2018.

The Alliance Pipeline faces competition in pipeline transportation to its Chicago, Illinois area delivery points and interconnected pipeline delivery points downstream of its Chicago terminus from both existing pipelines and proposed projects. The Alliance Pipeline system is also exposed to competition from new sources of natural gas, such as the Appalachian Basin which runs from upstate New York to Virginia. The continued development of the Appalachian Basin may provide an alternative source of gas to this location and further decrease natural gas imports from Canada into the northeastern region of the U.S.

Ruby Pipeline

The Ruby Pipeline is a natural gas transmission system delivering natural gas production from the western U.S. The Ruby Pipeline is 1,094 km in length with a 42-inch diameter and has a current capacity of 1.5 bcf/d.

Ruby Pipeline is owned equally by Pembina and Kinder Morgan Inc., which also operates the pipeline. Pembina has a 50 percent convertible preferred interest in the Ruby Pipeline which provides for distributions of US$91 million annually in priority to distributions on common equity. Pembina's preferred interest may convert to a common equity interest either at Pembina's option or automatically upon the contracting of an additional 250 MMcf/d of long-term firm capacity above the currently contracted capacity, at rates consistent with current contracts on the Ruby Pipeline.

Approximately 69 percent of the capacity of the Ruby Pipeline (approximately 1,068 MMcf/d, gross) is contracted under long-term, firm contracts that expire in 2021 and 2026.

The Ruby Pipeline competes to deliver gas into the western U.S. primarily with western Canadian gas delivered through TransCanada Corporation’s gas transmission northwest pipeline system and, to a lesser extent, with U.S. Rockies gas delivered through Williams Northwest Pipeline LLC’s northwest pipeline (" Williams Pipeline "). The Ruby Pipeline provides an important source of supply diversification for customers in the Pacific Northwest U.S. and northern California who would otherwise be largely reliant on Canadian supply.

The Ruby Pipeline competes to export gas from the U.S. Rockies with several pipelines, including the Williams Pipeline into the Pacific Northwest, Kern River Gas Transmission Company’s Kern River pipeline into California, and numerous pipeline systems that can transport gas into the eastern and midwestern U.S. Growing gas production from prolific shale basins in the northeastern U.S. has negatively affected eastern exports of U.S. Rockies gas in recent years relative to western exports on pipelines, including the Ruby Pipeline.

Grand Valley

Pembina's transmission pipelines business also includes a 75 percent jointly controlled interest in Grand Valley 1 Limited Partnership wind farm.

Facilities Division

Overview

The Facilities Division includes natural gas processing and NGL fractionation facilities and related infrastructure that provide Pembina's customers with natural gas, condensate and NGL services. Pembina's natural gas gathering and processing assets, are strategically positioned in active, liquids-rich areas of the WCSB and are integrated with the Company's other businesses. Pembina provides sweet and sour gas gathering, compression, condensate stabilization, and both shallow cut and deep cut gas processing services for its customers, primarily on a fee-for-service basis under long-term contracts. Virtually all of the condensate and NGL extracted through these facilities is transported by Pembina's Pipelines Division. A significant portion of the volumes are further processed at Pembina's NGL fractionation facilities. In total, Pembina has gas processing facilities with approximately 6 bcf/d of net gas processing capacity ⁽¹⁾ . Additionally, the Facilities Division includes NGL fractionation, cavern storage, and terminalling (loading and off-loading services) facilities. These facilities are fully integrated with the Company's other divisions, providing customers across the WCSB and North America with the ability to contract for more than one service with Pembina and access to a comprehensive suite of services to enhance the value of their hydrocarbons. In total, Pembina has fractionation facilities with 326 mboe/d of net fractionation capacity ⁽¹⁾ , and approximately 14 mmbbls of liquids storage.

Gas services

Pembina's primary gas services assets include the following:

facility (the Kakwa River Deep Cut). In total, the Cutbank Complex has 675 MMcf/d gross (618 MMcf/d net) of shallow cut sweet gas processing capacity, 205 MMcf/d of sweet deep cut extraction capacity and 200 MMcf/d of raw-to-deep cut sour gas processing capacity. The Cutbank Complex also includes approximately 450 km of gathering pipelines, nine field compression stations and centralized condensate stabilization;

Under an agreement with Chevron and KUFPEC, as described further below, Pembina is currently undertaking two development projects at the Duvernay Complex:

Pembina's gas services business has approximately 50 customers, including independent producers as well as multi-national oil and gas companies. Pembina processes customers' natural gas at Pembina's Cutbank Complex, Saturn Complex, Resthaven Facility, Duvernay Complex and Veresen Midstream facilities and delivers the processed natural gas to the Spectra Energy T-North system in British Columbia, TransCanada Corporation pipeline system and Alliance Pipeline system in Alberta and the NGLs to the Pembina's Peace Pipeline system. Customers' natural gas processed at SEEP is delivered to the TransGas System in Saskatchewan and the ethane is delivered to Pembina's Vantage Pipeline system.

Under the contractual arrangements with producers associated with the Cutbank Complex, Saturn Complex, Resthaven Facility, SEEP and Duvernay Complex, Pembina is largely protected from the impact of market fluctuations in the price of natural gas and NGL. The liquids handling, gathering and processing business is based on charging fees to customers on the volume of raw or processed gas that is gathered and/or processed through its facilities and the fees are largely based on a fixed-fee-for-service methodology and, in some instances, based on fixed return on invested capital. The fee-for-service contracts associated with the gas services business comprise a mixture of firm and interruptible service contracts of varying durations. The contractual fee structure incorporates a capital fee based on functional unit usage, as well as provisions for the recovery of operating and overhead costs.

Gas producers continued to focus their exploration and development on liquid-rich gas areas during 2018. Pembina's gas services expansions and new development plans continue to be focused in condensate and NGL-rich geographical areas, including the regional Montney and Duvernay areas, along with other emerging liquid-rich formations.

Gas processing infrastructure requirements are largely driven by area profitability, which is impacted by commodity prices, and the gas producer's ability to access capital. In times where gas prices are relatively low and NGL prices are relatively high, producers are incentivized to extract as much NGL out of the raw gas stream as possible. During times when NGL prices are lower, producers may opt to leave more liquids entrenched within their raw gas. Pembina has the flexibility to offer facilities with varying degrees of liquids extraction capability to support customers in a variety of market conditions.

With its existing assets, Pembina is able to separate condensate, process sweet and sour gas, extract NGL from the gas and transport the liquids through its conventional pipelines to its CDH and fractionation complexes, where Pembina is able to market the products to end users. With an integrated service offering along the condensate and NGL value chain and substantial gas processing plant construction and operating experience, Pembina believes it is strongly positioned compared to other service providers to capture new business.

Duvernay II and Duvernay III are being developed under a 20-year infrastructure development and service agreement with Chevron and KUFPEC, which includes an area of dedication in the, liquids-rich Kaybob region of the Duvernay resource play near Fox Creek, Alberta. Under this agreement and subject to Chevron sanctioning development in the region, Chevron has the right to require Pembina to construct, own and operate gas gathering pipelines and processing facilities, liquids stabilization facilities and other supporting infrastructure for the area of dedication, together with Pembina providing long-term service for Chevron on its pipelines and fractionation facilities. Subject to Chevron and regulatory approvals, the infrastructure developed over the term of this agreement has the potential to represent a multi-billion-dollar investment by Pembina. The Duvernay II and Duvernay III facilities will have a 20-year contractual life and will be back-stopped by a combination of fee-for-service and fixed-return arrangements.

In the region of the Dawson Assets, Veresen Midstream has entered into fee-for-service agreements with the CRP and Encana, whereby the CRP has committed to use Veresen Midstream’s Dawson Assets on an exclusive basis for a 30-year term within an area of mutual interest. The contract expires in 2044.

In the Hythe/Steeprock area, Veresen Midstream has entered into a cost of service-agreement, including take-or-pay commitments, with Encana for the majority of the current available capacity of these facilities over the duration of the services agreement. The contract expires in 2031.

NGL Services

Pembina's primary NGL services assets include the following:

storage in Redwater, Alberta. Redwater purchases NGL mix from various natural gas and NGL producers and fractionates it into finished products for further distribution and sale. Redwater also processes NGL supply volumes from Pembina's Younger NGL extraction plant. Also located at RFS are Pembina's truck and rail terminals which service Pembina's proprietary and customer needs for importing and exporting NGL products.

Pembina's NGL service business provides a multitude of services for its customers. It is common practice for customers to sign up for more than one service with Pembina, including fractionation, storage, loading and off-loading.

At Redwater, Pembina provides NGL fractionation, storage and terminalling (loading and off-loading) services. NGL fractionation services at Redwater are provided under single or multi-year, fee-for-service contracts.

Through its East NGL System, Pembina provides NGL fractionation, storage and terminalling (loading and off-loading) services on an interruptible, fee-for-service basis, primarily to Pembina's Marketing & New Ventures Division.

Storage services are typically provided to various customers under either a fee-for-service or fixed-return agreement with contract lengths ranging between one to 25 years. Loading and off-loading services are provided on a fee-for-service basis under contracts that range from one-year to multi-year terms.

Pembina provides terminalling services for the North West Redwater Partnership (" NWRP ") with respect to NWRP’s Sturgeon Refinery. The terminalling services are provided under a 30-year fixed return agreement.

Pembina's NGL services business is subject to competition from other fractionators, truck terminals, and storage facilities which are either in the general vicinity of the facilities or have gathering systems that extend, or could potentially extend, into areas served by the facilities. Going forward, the demand for additional infrastructure will be determined primarily by the rate at which the WCSB hydrocarbon production grows.

Marketing & New Ventures Division

Overview

The Marketing & New Ventures Division strives to maximize the value of hydrocarbon liquids and natural gas originating in the basins where the Company operates. Pembina seeks to create new markets, and further enhance existing markets, to support both the Company's and its customers' overall business interests. In particular, Pembina seeks to identify opportunities to connect hydrocarbon production to new demand locations through the development of infrastructure. Pembina strives to increase producer netbacks and product demand to improve the overall competitiveness of the basins where the Company operates.

Marketing Activities

Within the Marketing & New Ventures Division, Pembina undertakes value-added commodity marketing activities, including buying and selling products (natural gas, ethane, propane, butane, condensate and crude oil), commodity arbitrage and optimizing storage opportunities. The marketing business enters into contracts for capacity on both Pembina's and third-party infrastructure, handles proprietary and customer volumes and aggregates production for onward sale. Through this infrastructure capacity, as well as utilizing the Company's rail fleet and rail logistics capabilities, Pembina's marketing business adds incremental value to the commodities by transporting volumes to high value markets across North America. Financial and operational results in the marketing business are subject to commodity price fluctuations, product price differentials, location basis differentials, foreign exchange rates and volumes.

The value potential associated with Pembina's marketing business is dependent upon the ability of Pembina to: provide connections to both downstream pipelines and end-use markets; understand the value of the commodities transported, stored and terminalled; provide flexibility and a variety of storage options; and adjust to a liquid, responsive, forward commodity market. Pembina actively monitors market conditions and commodity stream values and qualities to target revenue opportunities and service offerings. Pembina is also proactively working with upstream and downstream customers to develop value-added terminalling solutions and increase available optionality. The prices of products that are marketed by Pembina are subject to volatility as a result of these factors and other factors such as seasonal demand changes, weather conditions, general economic conditions, changes in crude oil markets and other factors. See " Risk Factors – Risks Inherent in Pembina’s Business – Commodity Price Risk ".

Customers within Pembina's marketing business are generally those who produce and/or market crude oil, natural gas and natural gas liquids, are downstream markets for those volumes, or are interested in ancillary services related to those volumes. Pembina’s marketing business leverages the value chain, focusing on activities that complement the existing network of facilities and energy infrastructure across Pembina's asset base.

The contractual arrangements associated with Pembina's marketing business vary by service offering.

Aux Sable

The Marketing & New Ventures Division includes Pembina's ownership interest in Aux Sable, since the majority of cash flow from this asset is derived from the sales of commodities.

Aux Sable U.S. is owned by Pembina (42.7 percent), Enbridge Inc. (42.7 percent) and Williams Partners (14.6 percent). Aux Sable Canada is owned equally by Pembina and Enbridge Inc.

Aux Sable U.S. includes the Channahon Facility, located in Channahon, Illinois, about 80 km southwest of Chicago near the eastern terminus of the Alliance pipeline. The Channahon Facility is capable of processing 2,100 MMcf/d of natural gas and can produce approximately 131 Mbpd of specification NGL products. All of the natural gas delivered via the Alliance Pipeline is processed at the Channahon Facility.

Under transportation agreements with natural gas shippers on the Alliance Pipeline, Aux Sable Liquid Products LP has the right to extract NGL from all of the natural gas transported for the period of the agreements. Aux Sable has signed NGL value-sharing agreements with gas producers in Alberta, British Columbia and North Dakota. Approximately 60 percent of the gas contracted by Aux Sable is under these NGL value-sharing agreements.

Aux Sable Liquid Products LP entered into an exclusive NGL sale agreement with an NGL marketer on December 31, 2005, pursuant to which Aux Sable Liquid Products LP sells a portion of its NGL production from the Channahon Facility to such counterparty. In return, Aux Sable Liquid Products LP receives a fixed annual fee and percentage share of any net margin generated from the business in excess of specified thresholds. The NGL sales agreement has an initial term expiring March 31, 2026 and may be extended by mutual agreement for 10-year terms on a continuous basis.

The Channahon Facility includes storage and rail facilities as well as NGL pipelines that connect the facility to various third-party terminals, refineries and petrochemical plants. The scale and geographic location of the Channahon Facility provides western Canadian and Bakken producers with economic options for liquids rich natural gas take, away and access to U.S. NGL markets, avoiding costly investments in field processing and transportation infrastructure.

The other primary assets of Aux Sable U.S. include:

The primary assets of Aux Sable Canada include:

Alliance Canada Marketing

Alliance Canada Marketing is owned by Pembina (42.7 percent), Enbridge (42.7 percent) and Williams Partners (14.6 percent) and holds total firm transportation capacity of 76.2 MMcf/d on the Alliance Pipeline. This capacity was not contracted at the time Alliance Pipeline was approved and Alliance Canada Marketing was formed solely to manage this capacity. Alliance Canada Marketing’s mandate is to generate earnings from the capacity, for the benefit of its owners, through the purchase, transportation and sale of natural gas and from the optimization of those activities. As a shipper on the Alliance Pipeline, Alliance Canada Marketing is entitled to the relevant capacity and is obligated to pay the associated demand charges.

Alliance Canada Marketing has assigned the capacity it holds on the Alliance Canada Pipeline to a marketer. Alliance Canada Marketing has also appointed the marketer as agent in the U.S. for the capacity it holds and uses on the Alliance U.S. Pipeline. In both Canada and the U.S., the marketer has agreed to pay negotiated market-based rates to use its respective capacity.

New Ventures

Pembina's Marketing & New Ventures Division includes development of new large-scale, or value chain extending projects, currently including:

PDH/PP Facility

On February 4, 2019, Pembina and PIC have approved development of a $4.5 billion, 550,000 tonne per annum integrated propane dehydrogenation plant and polypropylene upgrading facility (the " PDH/PP Facility ") through their equally-owned joint venture, CKPC. The PDH/PP Facility will be located adjacent to RFS and will convert approximately 23 Mbpd of locally supplied propane into polypropylene, a high value polymer used in a wide range of finished products, including automobiles, medical devices, food packaging and home electronic appliances, among others. Pembina's net investment is expected to be $2.5 billion. This project is expected to be in-service mid-2023, subject to environmental and regulatory approvals.

Jordan Cove LNG Project

Pembina has proposed development of a 7.8 million tonne per annum (approximately 1.3 bcf/d) greenfield LNG export terminal in Coos Bay, Oregon, and a natural gas pipeline that will transport natural gas from the Malin Hub in southern Oregon to the export terminal. In September 2017, the Company filed applications with the FERC for the construction and operation of the Jordan Cove LNG Project.  The Company received a FERC Notice of Schedule during the third quarter of 2018 and, based on that notice, currently anticipates a final FERC decision on the Jordan Cove LNG Project in November of 2019.  Pembina anticipates first gas in 2024, pending the receipt of the necessary regulatory approvals, a positive final investment decision and other requirements. Pembina also continues to work with various state and other agencies with an objective to progress the project on a similar timeline.

Given the size of the Jordan Cove LNG Project, the Company intends to seek partners for both the Pacific Gas Connector Pipeline and liquification facility thereby reducing its current 100 percent ownership interest to a net ownership interest of between 50 and 60 percent.

Seasonality

Pembina's businesses are affected by seasonality as follows:

OTHER INFORMATION RELATING TO PEMBINA'S BUSINESS

Operations Management and Corporate Governance

Operating Management System

Pembina is committed to operational excellence and we deliver this through our Operating Management System (" OMS "). Pembina’s OMS provides a consistent framework for the design, development, and implementation of a comprehensive suite of policies, programs, procedures, standards and tools that guide, govern and drive operating activities. The Pembina OMS also supports cyclical planning, implementation, review, and adjustment of operational activities. Pembina’s OMS meets U.S. and Canada federal, provincial and state regulations to establish, implement and maintain a management system that anticipates, prevents, manages and mitigates conditions that may adversely affect the safety and security of Pembina’s employees, the public, the environment, and our infrastructure assets. Our OMS helps align Pembina with industry best practices and standards.

Pembina’s OMS is comprised of a number of individual programs that are intended to drive safety, reliability, efficiency, cost-effectiveness and continuous improvement of our operational performance. The programs are outlined below:

Pembina uses the “plan, do, check, act” cycle of continuous improvement. OMS risks are assessed and addressed by identifying goals, objectives and targets for risk reduction or performance improvement. Additionally, we are continuously improving our OMS over time through regularly scheduled OMS Working Group meetings and assurance and management review activities where corrective and preventative actions are identified and implemented. Any necessary modifications to the OMS are implemented through Pembina’s management of change framework. By implementing OMS in support of a strong safety culture, Pembina’s projects are designed, constructed, operated and decommissioned or abandoned in a manner that considers the safety and security of the public, Pembina personnel and physical assets, and the protection of property and the environment.

Corporate Governance

In 2018, Pembina updated its governance framework and completed a company-wide update of its corporate policies to align with the changing business of the Company and Pembina’s new strategy and purpose (see " Description of Pembina’s Business and Operations – Pembina's Business Objective and Strategy "), to comply with new and existing laws and regulations and to adhere to best practices in the industry. In addition, Pembina developed a new set of policies for the growing number of employees in the United States. With these changes, the Pembina OMS was also updated to reflect the updated corporate policies. Pembina's corporate policies reflect Pembina’s core values and beliefs, which in turn influence the OMS and associated programs.

Further information about Pembina's corporate governance will be included in Pembina's management information circular for its 2019 meeting of Shareholders, and copies of Pembina's Code of Ethics, Whistleblower Policy and other corporate governance policies can be found on Pembina's website at www.pembina.com.

Certain of Pembina's policies are aimed at preserving a positive relationship with the physical and social environment in which Pembina operates. These policies are outlined below:

Health, Safety and Environment (" HSE ") Policy (Canada and United States)

Health, safety and the environment are top priorities in all of Pembina's operations and business activities. Pembina is committed to being an industry leader in conducting its business so that it meets or exceeds all applicable laws and regulations designed to protect the health and safety of workers, the public and safeguard the environment affected by its activities. Pembina is also committed to improving its HSE performance. These areas are of paramount importance to management, employees and contractors at the Company. Pembina believes that excellence in HSE practices is essential to the well-being of the Company.

The Safety and Environment Committee of the Board of Directors monitors compliance with the HSE Policy through regular reporting.

Enterprise Risk Management Policy

This policy sets out the Company’s enterprise risk management principles and specifies expectations associated with Pembina’s risk management activities and governance. Enterprise risk management consists of practices and procedures applied across the Company to identify, measure, assess, respond to, monitor and report on principal risks that may affect the achievement of business objectives.

Code of Ethics Policy (Canada and United States)

Pembina’s reputation is one of its most important assets. The purpose of the Code of Ethics Policy is to establish a high standard of integrity and ethical behaviour to support Pembina’s reputation and our relationships with our internal and external stakeholders. All personnel are expected to comply with the Code of Ethics Policy at all times . The Code of Ethics Policy sets out principles for ethical conduct in the following areas: conflicts of interest; business relationships and fair dealing; compliance with the law; government relations; health, safety and environmental matters; integrity of financial information; disclosure and insider trading; stakeholder and public relations; privacy and confidentiality; protecting our assets and records; entertainment, gifts and other payments; workplace environment and relationships; and reporting responsibilities and procedures.

Alcohol and Drug Policies (Canada and United States)

As part of Pembina's commitment to its employees, contractors and the public, Pembina has comprehensive alcohol and drug policies in place which require that all personnel remain fit for work while on duty or on call. These policies forms a part of Pembina's approach to risk mitigation and safety and supports the HSE Policy. Pembina has also implemented an alcohol and drug policy for Department of Transportation workers as required under applicable United States laws.

Aboriginal and Tribal Relations Policy (Canada and United States)

By striving for positive and mutually-beneficial relationships with Aboriginal and Tribal leadership and communities, Pembina employees, consultants and contractors will help build continued success for Pembina's existing and expanding systems and other businesses. As part of Pembina’s approach to Aboriginal and Tribal relations, Pembina seeks to enter into lasting and mutually-beneficial relationships with all Aboriginal and Tribal peoples affected by its operations.

Whistleblower Policy (Canada and United States)

Pembina is committed to high standards of professional and ethical conduct in all activities. Pembina's reputation for honesty and integrity among its stakeholders is key to the success of its business. The transparency, honesty, integrity and accountability of Pembina's financial, administrative and management practices are vital. These high standards guide the decisions of the Board of Directors and are relied upon by Pembina's stakeholders and the financial markets.

For these reasons, it is critical to maintain a workplace where concerns regarding questionable business practices can be raised without fear of any discrimination, retaliation or harassment. Pembina also believes that encouraging a culture of openness and ethical leadership from management supports this process. As such, Pembina's Whistleblower Policy encourages directors, officers, employees, consultants, contractors, agents and external stakeholders to act responsibly, raise concerns and report any

potential instances of unethical practices within Pembina, rather than overlooking a problem or seeking a resolution of the problem outside Pembina. In addition to raising concerns directly with Pembina management, individuals may report concerns anonymously and on a confidential basis to the chair of the Audit Committee of the Board of Directors or through Pembina's whistleblower line, which is available 24 hours a day, seven days a week both online and through a toll-free number. Complaints received by Pembina under its Whistleblower Policy are thoroughly investigated.

Corporate Security Policy

Pembina is committed to protecting the safety of its workers, the public, and to safeguarding Pembina's facilities, physical infrastructure, and physical property. These areas are of paramount importance to management, employees and contractors at the Company. Pembina believes that excellence in security management is essential to the well-being of the Company. As such, Pembina is committed to identifying security risks and establishing appropriate programs and procedures to reduce these risks to an acceptable level, and to testing these programs and procedures to assess their effectiveness on a regular basis.

Cyber Security Policy

Pembina is committed to protecting the confidentiality, integrity and availability of its information assets. These areas are of paramount importance to management, employees and contractors at the Company. Pembina believes that excellence in security management of its information assets is essential to the well-being of the Company. As such, Pembina is committed to identifying security risks and establishing appropriate programs and procedures, including the Enterprise Cyber Security Plan, to reduce these risks to an acceptable level, and to testing these programs and procedures to assess their effectiveness on a regular basis.

Privacy Policy

Pembina is committed to maintaining the accuracy, confidentiality and security of personal information in accordance with applicable privacy laws. Protection of personal information is of paramount importance to management, employees and contractors at the Company. As such, Pembina is committed to setting out the manner in which Pembina collects, uses, discloses, protects and otherwise manages personal information.

Respectful Workplace Policy (Canada)/Policy Prohibiting Harassment and Discrimination (United States)

Pembina is committed to providing a respectful workplace in which all people are treated with respect and dignity. The safety and well-being of everyone working for or in connection with Pembina is a priority. Harassment, discrimination and violence in the workplace will not be tolerated in any form. These policies establish clear standards and expectations for all staff to prevent and protect individuals from workplace harassment, discrimination and violence.

Security Management Policy

Pembina is committed to protecting the safety of its workers, the public, and to safeguarding Pembina's facilities and information. These areas are of paramount importance to management, employees and contractors. Pembina believes that excellence in Security Management is essential to the well-being of the Company.

Information and Communication Systems

Pembina has a Pipeline Control Management Program in place to ensure that our pipeline systems are operated safely and reliably. As part of the Pipeline Control Management Program, Pembina employs modern SCADA technology on the majority of its pipeline systems. The SCADA systems allow for continuous electronic monitoring and control of the pipeline systems from dedicated computer consoles located in Pembina's control centre in Sherwood Park, Alberta. Operators monitor the computer consoles 24 hours per day, 365 days per year. The SCADA systems and associated leak detection software continually monitor pipeline flow and operating conditions. Line balance calculations are performed automatically by the system and alarms are triggered when imbalances are detected. When imbalance alarms are triggered, trained control centre operators investigate the alarm or shut down the pipeline in accordance with Pembina's Segment Imbalance Response Protocol.

Integrity Management

Pembina employs comprehensive asset integrity management programs and dedicates a significant portion of its annual operating budget directly to integrity management activities. Pembina's integrity management programs include the systems, processes, analysis and documentation designed to ensure proactive and transparent management of its pipeline systems and facilities, in compliance with applicable standards and regulations.

Pembina's asset integrity management programs are designed to achieve enhanced safety, reliability and longevity through the entire asset lifecycle. They incorporate industry best practices and are designed to meet or exceed regulatory requirements with the goal of achieving enhanced safety, reliability and longevity of our assets.

Integrity management begins at the engineering and design phase. Pembina has a robust set of engineering and design specifications to ensure learnings and best practices are captured and consistently applied to future projects. At the early stages of building a new pipeline, we ensure that pipeline routes are chosen to avoid geologically unstable or high consequence areas and to minimize environmental impact. To further mitigate the risk and impact of an incident, we design our pipelines so that they can be safely shut down and that segments can be isolated by installing block valves at strategic intervals along the system. Where appropriate, we take extra safety precautions, such as increasing pipe wall thickness or depth-of-cover, to help mitigate risks. In addition, when it comes to choosing materials for new construction, Pembina only uses steel pipe and other products that have been manufactured to meet the highest quality standards and specifications. As part of the design of facilities, impacts to existing infrastructure are identified and mitigation measures established as part of the Process Hazard Assessment process. The outcome is that lifecycle costs are minimized, while assuring safe, reliable and compliant operation.

Proactive pipeline integrity management activities extend into operations with programs, including right-of-way patrols and public awareness to reduce the likelihood of third-party damage, system-specific hazard evaluations and risk assessments, geotechnical programs to manage slope instability and river crossings, the use of specific chemicals to reduce the likelihood of internal corrosion from impurities and bacteria in the oil, cathodic protection to mitigate the possible growth of external corrosion, training and competency management programs for staff and contractors, enhanced emergency response procedures and training exercises.

We plan and execute scheduled turnarounds and outages at our gas processing, fractionation and pipeline facilities to complete required maintenance and inspection of pressure equipment, tanks, piping and pressure relieving devices. By using data collected through our facility integrity program, we can provide cost-effective, safe and reliable operation of our facilities – to the benefit of our customers and shareholders.

Environmental Matters

Pembina's pipelines and other assets are subject to environmental regulation and relevant approvals, and must comply with applicable federal, provincial, state and local laws and regulations in Canada and the U.S. Such laws and regulations govern, among other things, operating and maintenance standards, emissions and waste discharge and disposal. Management expects that Pembina's facilities and operations meet or exceed those requirements. Pembina participates in the following applicable regulated emission reporting programs: Canadian Greenhouse Gas Emissions Reporting Program, Alberta Specified Gas Reporting Program, Ontario Cap and Trade Reporting Regulations, Canadian National Pollutant Release Inventory Reporting Program and Carbon Competitiveness Incentive Regulation.

To confirm regulatory compliance and conformance with Pembina's internal environmental standards, Pembina has in place an Environmental Management Program, which includes a planned environmental audit program. As part of this program, regularly scheduled third-party environmental compliance audits are conducted at various facilities within a selected business unit each year. The Environmental Management Program is designed such that assets within each major business unit are audited at least once every five years.

Pembina's focus on integrity management and safe operations continues to result in low incident frequency and minimal environmental impact. Each year, to manage environmental liability, Pembina invests in the remediation and reclamation of pre-existing spill sites, thereby reducing Pembina’s environmental liabilities. In addition to the environmental expenses associated with its operations, Pembina also invests in environmental assessment, planning, permitting and post-construction monitoring associated with the Company's capital projects.

Safety Program

Pembina has a Safety Program in place which employs a systematic approach comprised of principles, standards, procedures, guidelines, and other supporting documents, which are aligned with, and supportive of, the HSE Policy and other Pembina programs, including training programs, that form Pembina's OMS.

To further enhance improvement company-wide, Pembina has established a corporate incident review panel (" IRP ") and an Executive Safety Committee. The IRP meets six times a year and consists of operations, engineering and safety leaders as well as business and service unit Vice Presidents, Senior Vice Presidents and the President and Chief Executive Officer. The IRP is focused on analyzing and understanding the causes of incidents and determining and completing resulting action plans to eliminate re-occurrence and ensuring that learnings are fully communicated and implemented on a corporate-wide basis.

Pembina holds a Certification of Recognition designation which is awarded annually by the Alberta government to employers who have health and safety programs that meet established government standards.

Pembina uses ComplyWorks, a program that aggregates and discloses the safety track record of service providers, to manage contractor pre-qualifications, orientations and compliance. The Construction Supervisor Onboarding Program and Contract Safety Representative Onboarding Process were created to ensure contractors in these roles are provided with a consistent and standardized approach to Pembina’s policies, safety culture and gain a clear understanding of their specific role.

Emergency Management Program

Pembina is committed to being ready to safely and effectively respond to emergency situations related to or impacting our operations. As part of Pembina's emergency preparedness, we conduct regular staff emergency awareness sessions and ensure that local emergency responders (police, fire/EMS, disaster services, and others) are provided with key information to facilitate their response to potential emergency situations.

Inventories of specially-designed emergency response equipment for deployment along Pembina's pipeline system are maintained. Additionally, as a member of the Western Canadian Spill Services Co-op, the Canadian Energy Pipeline Association Mutual Aid Plan and Emergency Response Assistance Canada, Pembina has access to emergency response equipment and participates in emergency response exercises with other industry members. Emergency response equipment is strategically located near Pembina's operations.

Security Management Program

Pembina’s Security Management Program (" SMP ") is the foundation for corporate security and cyber security management. This enables Pembina to conduct its activities and operations in a manner consistent with Pembina’s commitment to protecting people, the environment and property. The SMP establishes requirements for development, implementation, maintenance, and evaluation process of security management activities. The SMP is based on established management system models with the objective of utilizing a structured system that enables ongoing review and continual improvement of security management performance and related processes. Continual improvement is part of Pembina’s SMP with goals, objectives and targets established on an annual basis. The SMP includes documentation that describes Pembina’s processes to: 

Damage Prevention and Public Awareness Programs

Working safely around pipelines and preventing damage to Pembina owned and operated pipelines and facilities and associated infrastructure is in the best interest of all of Pembina’s stakeholders. Pipeline infrastructure is often buried underground and, as a result, preventing pipeline damage depends on operators, the public and stakeholders working together to be aware of the

dangers and taking appropriate actions to prevent risk of damage. Pembina’s Damage Prevention and Public Awareness Programs are dedicated to worker safety, public safety, protection of the environment and the preservation of the integrity of our infrastructure.

Pembina is committed to keeping those who live and work around our underground infrastructure informed and aware of our underground infrastructure and operational activities by establishing meaningful and open communications. This commitment includes maintaining positive relationships with the residents, landowners, communities and the public, as well as Aboriginal communities near our operations.

Operations and Maintenance – Operator Qualification and Preventative Maintenance Management

In 2018, Pembina’s SAP-based preventative maintenance management tool ( " PMM " ) was completed. The objective of the PMM is to ensure safe, consistent and efficient asset management. PMM is a key component of our OMS and a driver of safe and efficient asset management and operation.

Pembina’s Operator Qualification Program for the United States operations of the Vantage Pipeline and West Spur Lateral is in place to ensure that our Operators and Technicians are trained and qualified to perform their duties safely.

Industry Regulation

Pembina’s pipelines are regulated by various regulatory bodies, including, but not limited to, the AER, AUC, BCUC, BCOGC, NEB, PHMSA and FERC.

The Regulatory Financial Program (“ RF Program ”) and its supporting processes, procedures and practices are used to provide strategic direction, leadership and oversight of financial operational regulatory compliance at Pembina. The purpose of the RF Program is to develop, implement and maintain financial operational regulatory processes, procedures and practices in accordance with regulatory requirements. Currently, the RF Program only covers NEB and FERC regulated pipelines that Pembina wholly owns and operates.

AER and AUC

With respect to rate-regulation in Alberta, once a permit to construct a pipeline is issued by the AER, subject to regulatory intervention, the pipeline is free to establish tolls in a competitive market environment. Tolls are established under contracts of varying terms and conditions and are also posted by location for non-firm (interruptible) service. Posted tolls which are applied to non-firm volumes can generally be adjusted to respond to changing volumes, costs and market circumstances. Contracted tolls on firm contracts can also be adjusted, where permitted by the terms of the contract, for such things as changes in the consumer price index, changes in power costs, extraordinary natural events that impact pipeline integrity and changes to regulations associated with pipelines. For common carriers, pipeline customers have recourse to the AER, with respect to pipeline access and discrimination among customers and to the AUC on tariff matters.

Pembina’s facilities are subject to regulation by the AER under the Licensee Liability Rating Program and the Large Facility Liability Management Program. These programs require that Pembina submit an abandonment and reclamation estimate to the AER and that Pembina demonstrate the financial ability to complete the required activities.

BCUC

The tolls on certain of the B.C. Pipelines are rate-regulated by the BCUC. The BCUC approves tolls that may be charged by common carriers and regulates other tolls on a complaints basis.

NEB

Interprovincial or international pipelines fall under the NEB's jurisdiction. Under the National Energy Board Act and regulations, companies who own and/or operate NEB-regulated pipelines are divided into two groups. Group 1 consists of the major pipeline companies which are subject to enhanced regulatory oversight by the NEB. The other pipeline companies under the jurisdiction of the NEB, not included in Group 1, have been classified as Group 2. The Canadian segment of the Alliance Pipeline is classified as Group 1. Pembina's other NEB regulated pipelines are regulated as Group 2 companies by the NEB. For these Group 2 pipeline

systems, if no complaint is filed, the NEB may presume that the filed tariffs are just and reasonable. The Northwest Pipeline, the Taylor to Belloy Pipeline, the Pouce Coupé Pipeline and the Pouce Coupé Lateral, all licensed by Pembina’s wholly-owned subsidiary Pouce Coupé Pipe Line Ltd., are regulated by the NEB. Pembina's Taylor to Boundary Lake Pipeline owned by Pembina Energy Services Inc. and Pembina's Vantage Pipeline, which is owned by Pembina Prairie Facilities Ltd., both wholly-owned subsidiaries of Pembina, are regulated by the NEB. The four lines collectively referred to as the Tupper Pipelines, licensed by Veresen Energy Pipeline Inc., and 42 percent owned by Pembina, are also regulated by the NEB. The Kerrobert pipeline is regulated by the NEB but is not operated by Pembina.

In October 2016, regulations with respect to the Pipeline Safety Act , specifically Financial Requirements Respecting Pipelines were pre-published in the Canada Gazette, Part I. In July 2018, the Pipeline Financial Regulations were published in the Canada Gazette Part II and will come into force in July 2019. Pembina will be required to maintain a minimum of $1 billion in financial resources to meet the absolute liability limit requirements in the Pipeline Safety Act . The NEB requires the Company to maintain these financial resources and readily accessible funds in specific types of financial instruments.

Bill C-69, which is not yet law, proposes the repeal of the National Energy Board Act and the enactment of the Canadian Energy Regulator Act. Overall, the Canadian Energy Regulator Act parallels the current regulatory regime under the National Energy Board Act in several areas, including: pipeline traffic, tolls and tariffs; authorizations for the export of oil and gas; liabilities for unintended or uncontrolled releases; and a pipeline company's financial requirements. Significant changes to the regulatory regime include establishing a new entity (the " Canadian Energy Regulator ") to replace the NEB, broader "public interest" considerations prior to making a recommendation to the Minister on an application for a pipeline certificate and increased indigenous participation.

FERC

The FERC is an independent U.S. agency that regulates the interstate transmission of natural gas, and oil. The Ruby Pipeline and the U.S. segment of the Alliance Pipeline are subject to FERC jurisdiction. Further, Alliance U.S. is subject to regulation by the FERC as a "natural gas company" under the U.S. Natural Gas Act of 1938. Under such legislation, the FERC has jurisdiction over Alliance U.S. with respect to virtually all commercial aspects of its business, including transportation of natural gas, rates and charges, construction of new facilities, extension or abandonment of service and facilities, accounts and records, depreciation and amortization policies, the acquisition and disposition of facilities, the initiation and discontinuation of services, affiliate relationships and certain other matters.

In general, rates charged by interstate natural gas pipeline companies may not exceed the statutory "just and reasonable" or "recourse" rates approved by the FERC and natural gas pipeline companies are prohibited from granting any undue preference to any person or maintaining any unreasonable difference in their rates or terms and conditions of service. However, under the FERC's current policies, a pipeline may obtain approval to charge negotiated rates which differ from (and may exceed) the "just and reasonable" or the FERC regulated "recourse" rate. The FERC approved Alliance U.S.'s proposal to offer shippers both negotiated and "recourse" rate options. Accordingly, Alliance U.S.'s existing tariff contains both negotiated and "recourse" rates.

The U.S. segment of the Vantage Pipeline is subject to FERC jurisdiction, however not as an interstate natural gas pipeline, but rather as a liquids pipeline under the Interstate Commerce Act. See " Risk Factors – Risks Inherent in Pembina's Business – Abandonment Costs ", " Risk Factors – Risks Inherent to Pembina's Business – Environmental Costs and Liabilities " and " Risk Factors – Risks Inherent to Pembina's Business – Regulation and Legislation. "

Indemnification and Insurance

Pembina maintains insurance to provide coverage in relation to the ownership of its assets and also maintains standard director and officer insurance consistent with industry practice.

Pembina believes that it has procured such insurance coverage as would be maintained by a prudent owner and operator of the type of assets owned and operated by Pembina. This insurance coverage is subject to limits and exclusions or limitations on coverage that Pembina considers reasonable given the cost of procuring such insurance and current operating conditions. However, there can be no assurance that insurance coverage will be adequate in any particular situation or that insurers will be able to fulfill their obligations should a claim be made. Further, there can be no assurance that such insurance coverage will be available in the future on commercially reasonable terms or at commercially reasonable rates.

Employees

As at December 31, 2018, Pembina employed 2,162 personnel, of which 1,161 were engaged in the performance of field operations and superintendence activities, and 1,001 were engaged in the performance of facilities engineering, systems, management, finance, accounting, administration, human resources, information services, drafting, business development, safety and environmental service and other activities. Of the above field operations employees, 41 are unionized. Pembina's workforce is relatively stable with limited turnover and employees are financially encouraged to remain in Pembina's employment through options to purchase Common Shares, long-term incentive programs and pension plans, all of which vest over time.

Corporate Governance and Corporate Social Responsibility

Pembina is committed to maintaining a high standard of corporate governance and ethical practices, both within the corporate boardroom and throughout its operations. Pembina's corporate governance practices aim to:

Pembina published its first sustainability report in December 2018.

Pembina is a public company listed on the TSX and the NYSE, and it recognizes and respects rules and regulations applicable to listed issuers in both Canada and the U.S. Pembina's corporate governance practices comply with the Canadian governance guidelines, which include the governance rules of the TSX and the Canadian Securities Administrators, including:

Pembina also complies with the governance listing standards of the NYSE and the governance rules of the SEC that apply to foreign private issuers.

Pembina's governance practices comply with the NYSE standards for U.S. companies in all significant respects, except as summarized on Pembina's website at www.pembina.com. As a non-U.S. company, Pembina is not required to comply with most of the governance listing standards of the NYSE. As a foreign private issuer, however, Pembina must disclose how its governance practices differ from those followed by U.S. companies that are subject to the NYSE standards.

Some of Pembina’s best practices are derived from the NYSE rules and comply with applicable rules adopted by the SEC to meet the requirements of the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act .

CANADIAN OIL AND GAS INDUSTRY

General

The discussion below provides a high-level overview of the crude and heavy oil industry, the NGL and natural gas industry and the midstream infrastructure industry, with a particular focus on western Canada, given that a significant portion of Pembina's operations are situated in Alberta. Pembina also has operations in eastern Canada and the U.S. Volumes which feed into those assets predominantly originate in western Canada before being transported to eastern markets via a third-party pipeline.

Western Canada is the major source of conventional crude oil, synthetic crude oil, natural gas, bitumen and related products, including NGL and condensate, in Canada. Production comes primarily from Alberta with lesser amounts from British Columbia, Saskatchewan, Manitoba and the Northwest Territories. Synthetic crude oil and bitumen come from the oil sands developments near Fort McMurray, Alberta.

Efficient, low cost, and safe transportation by pipeline, rail and truck from producing fields and facilities to refineries, processing plants and domestic and export markets is essential to the Canadian oil and gas industry.

Canadian Crude and Heavy Oil

While western Canada has one of the world's largest crude oil reserves, the WCSB was once considered to be a declining resource. However, over the past number of years, the crude oil industry in western Canada has implemented improved drilling technologies, which have enabled increased recoveries and have enhanced economics. Technologies such as multi-stage hydraulic fracturing have allowed producers to access tighter areas of conventional reserves as well as shales, which were previously considered to be uneconomical. Through this development, crude oil produced from the WCSB has significantly increased.

Alberta is also abundant in oil sands – a natural mixture of sand, water, clay and a type of natural heavy oil called bitumen. Once the bitumen is recovered and processed to separate it from the sand and water and upgraded, synthetic crude oil is produced. Oil sands may be extracted by surface mining where it is moved by trucks to a processing facility or by in situ processes which use steam, solvents and/or thermal energy to allow the bitumen to be pumped to the surface. Because bitumen is so viscous, it often requires dilution with lighter hydrocarbons, such as condensate, to make it transportable by pipeline.

Crude oil production ends up being consumed in refineries. Refineries are widely distributed geographically and can be located anywhere along the transportation chain, from the production basin hub locations to mid-point junctions on transmission networks to tidewater where foreign production is able to access North American markets via marine transport. For locations directly connected to pipelines, there is a service requirement to manage supply with demand, balancing between the pipeline and the customer.

Pipelines continue to be the safest, most economical and predominant mode of transporting large amounts of crude oil, however, given the extensive rail infrastructure network across North America and the lack of sufficient export pipeline capacity, transporting hydrocarbon products by rail has gained momentum.

Product Transportation: Feeder Pipeline Systems

Feeder pipeline systems gather petroleum products from producing fields and facilities for transport to regional centres for storage, fractionation, refining and connection to larger pipelines. From these centres, petroleum products are further transported by export pipeline or rail systems either to domestic markets in western or eastern Canada or to markets in the northern U.S. for end–use or used as feedstock in refineries or the petrochemical industry. The major operational centre for the Canadian oil and natural gas industry is the Edmonton/Fort Saskatchewan area of Alberta, which is the largest crude oil refining centre in western Canada and a major fractionation and market hub for NGL and related products. In addition, the Edmonton/Fort Saskatchewan area is the hub of the Alberta feeder pipeline network and the starting point of many large Canadian export pipelines.

Truck terminals are a means for oil, condensate and NGL production, which is not pipeline connected, to secure transportation access to market.

Product Transportation: Export Liquids Pipeline Systems

The export liquids pipelines originating in the Edmonton area are the Trans Mountain Pipeline and the Enbridge Pipeline. Crude oil and refined products delivered to domestic and export markets on the west coast are transported through the Trans Mountain Pipeline. Crude oil and refined products delivered to eastern Canada and the northern U.S. are transported through the Enbridge Pipeline. NGL delivered to eastern Canadian and export markets are transported through the Enbridge Pipeline. The existing Keystone Pipeline and Express Pipeline also export crude oil from Hardisty, Alberta.

Natural Gas Liquids

The NGL industry involves the production, storage, and transportation of products that are extracted from natural gas prior to its sale to end-use customers. Natural gas is a mixture of various hydrocarbon components, the most abundant of which is methane. The higher value hydrocarbons, which include ethane (C2), propane (C3), butane (C4) and condensate (C5+), are generally in gaseous form at the pressures and temperatures under which natural gas is gathered and transported. NGL extraction facilities recover NGL mix from natural gas in a liquid form. The significant majority of NGL supply in western Canada is derived from natural gas processing, with the remainder derived from the refining of crude oil. The profitability of the industry is based on the products extracted being of greater economic value as separate commodities (net of the costs of extraction and transportation) than as components of natural gas.

The NGL value chain begins with the gathering of gas produced from the wellhead and moving it to a gas plant. The gas then gets processed through field processing plants and mainline extraction facilities, as well as treated for removal of water, sulphur and other impurities. The value chain culminates with the transportation of NGL mix from the gas plant via pipeline to fractionation plants where the NGL mix will be separated into saleable products and marketed to the final NGL customers.

Condensate is produced naturally at the wellhead when natural gas is brought to the surface at a gas well. It is then either trucked to a connection point on a pipeline or the natural gas plant may be connected directly into a gathering pipeline system for onward delivery to market. Condensate is used primarily as a diluent to blend with heavy crude oil to decrease viscosity and density, allowing transport in pipelines. In addition, condensate is used as a refinery feedstock in the production of gasoline, kerosene and jet fuel. With the growth in demand for diluents for heavy oil transportation, there is a requirement to manage diluents prior to injection into the various diluent delivery pipelines. This demand includes accessing the greatest variety of diluents, meeting diluent quality specifications and storage.

The North American markets for NGL are largely continental in nature, though exports have been increasing, with end uses varying substantially by product, from heating and transportation fuels to petrochemical and crude oil refining feed stocks. Ethane is used as feedstock for the petrochemical industry. Propane is the most versatile of the NGL products with uses such as home and commercial heating, crop drying, cooking, motor fuel and petrochemical feedstock. Butane is used primarily in gasoline blending, either directly or in the production of iso-octane and as a diluent for heavy oil.

NGL Extraction

NGL is recovered at three distinct types of facilities: natural gas field plants, natural gas mainline straddle plants and oil refineries. Field plants process raw natural gas, which is produced from wells in the immediate vicinity, to remove impurities such as water, sulphur and carbon dioxide prior to the delivery of natural gas to the major natural gas pipeline systems. Field plants also remove almost all condensate and as much as 65 percent of propane and 80 percent of butane to meet pipeline specifications, leaving ethane and unrecovered NGL in the natural gas. Most western Canadian field plants do not extract ethane but leave it in the natural gas. Once processed, the natural gas is then compressed and delivered to one of the major gas transmission systems in the region. In Alberta, any residual NGL and ethane in the natural gas is extracted at mainline straddle plants prior to export.

NGL extraction produces a mixed hydrocarbon product (either ethane-plus (C2+) or propane-plus (C3+)), which must be further processed in subsequent steps to separate out the individual products. At most field facilities, only sufficient NGL to make the natural gas marketable is extracted; however, with the addition of deep cut processing facilities and mainline straddle plants, further NGL extraction is possible to ensure the maximum amount of NGL is recovered. NGL products have historically been priced relative to oil, so this additional level of recovery is dependent on the relative value between oil and natural gas. As the relative price of oil versus natural gas increases, the economic impetus for this activity is also increased.

NGL Fractionation

NGL mix extracted at field plants and straddle plants is transported via pipelines, truck or rail to fractionation facilities, which separate the mix into its components: ethane, propane, butane and condensate. Due to size, storage and transportation limitations, fractionation generally does not occur at field plants, but rather at larger, well-connected, centralized locations. Once fractionated, the products are stored and transported to end markets by pipeline, truck or rail.

NGL Transportation

The efficient movement of NGL products requires significant infrastructure, including transportation assets (pipelines, trucks and rail cars), storage facilities, and terminals (rail and truck). The safest, most efficient and lowest-cost means for moving NGL products to markets is by pipeline. The Canadian energy sector has an extensive pipeline network for the transportation of NGL to fractionation facilities, petrochemical complexes, underground storage facilities and the end-user. Pipelines serve as the main mode of NGL transportation (pre- and post-fractionation). Additionally, NGLs are transported by truck and rail.

NGL Storage

Storage assets offer a number of key strategic advantages, which include: (i) providing the necessary operational buffer between production of NGL (which varies daily depending on gas flows and composition) and their consumption (which can vary from day-to-day and season-to-season depending on market needs); (ii) allowing for storage of NGL products for future utilization; and (iii) exploiting seasonal price differentials that may develop over the course of a year (particularly for propane and butane).

Natural Gas Transportation

The natural gas transportation industry from western Canada to eastern markets has historically been controlled by companies affiliated with TransCanada PipeLines Limited. Natural gas supply and pipeline infrastructure has grown over the past several years creating increased competition throughout North America.

The efficient movement of natural gas requires significant infrastructure, including pipelines and storage facilities. The safest, most efficient and the lowest-cost means for moving natural gas to markets is by pipeline. The Canadian energy sector has an extensive pipeline network for the transportation of natural gas to field plants and extraction facilities. Pipelines serve as the main mode of natural gas transportation.

DESCRIPTION OF THE CAPITAL STRUCTURE OF PEMBINA

The authorized capital of Pembina consists of an unlimited number of Common Shares, a number of Class A Preferred Shares, issuable in series, not to exceed twenty percent of the number of issued and outstanding Common Shares at the time of issuance of any Class A Preferred Shares, and an unlimited number of Class B Preferred Shares. As of December 31, 2018, there were approximately 507 million Common Shares outstanding, and approximately 17.9 million Common Shares issuable pursuant to outstanding options under the Option Plan. In addition, 10 million Series 1 Class A Preferred Shares, 6 million Series 3 Class A Preferred Shares, 10 million Series 5 Class A Preferred Shares, 10 million Series 7 Class A Preferred Shares, 9 million Series 9 Class A Preferred Shares, 6.8 million Series 11 Class A Preferred Shares, 10 million Series 13 Class A Preferred Shares, 8 million Series 15 Class A Preferred Shares, 6 million Series 17 Class A Preferred Shares, 8 million Series 19 Class A Preferred Shares and 16 million Series 21 Class A Preferred Shares were outstanding as of December 31, 2018.

The following is a summary of the rights, privileges, restrictions and conditions attaching to the Common Shares, the Class A Preferred Shares and the Class B Preferred Shares.

Common Shares

Holders of Common Shares are entitled to receive notice of and to attend all meetings of Shareholders and to one vote at such meetings for each Common Share held. The holders of the Common Shares are, at the discretion of the Board of Directors and subject to applicable legal restrictions, entitled to receive any dividends declared by the Board of Directors on the Common Shares, and are entitled to share in the remaining property of Pembina upon liquidation, dissolution or winding-up, subject to the rights of the holders of the Class A Preferred Shares and Class B Preferred Shares.

Pembina has a shareholder rights plan (the " Plan ") that was adopted to ensure, to the extent possible, that all Shareholders are treated fairly in connection with any take‑over bid for Pembina and to ensure that the Board is provided with sufficient time to evaluate unsolicited take-over bids and to explore and develop alternatives to maximize Shareholder value. The Plan creates a right that attaches to each present and subsequently issued Common Share. Until the Separation Time (as defined in the Plan), which typically occurs at the time of an unsolicited take‑over bid, whereby a person acquires or attempts to acquire 20 percent or more of the Common Shares, the rights are not separable from the Common Shares, are not exercisable and no separate rights certificates are issued. Each right entitles the holder, other than the 20 percent acquirer, from and after the Separation Time (as

defined in the Plan) and before certain expiration times, to acquire one Common Share at a substantial discount to the market price at the time of exercise. The Board of Directors may waive the application of the Plan in certain circumstances. The Plan was reconfirmed by Shareholders at Pembina's 2016 annual meeting and must be reconfirmed at every third annual meeting thereafter. Accordingly, the Plan, with such amendments as the Board of Directors determines to be necessary or advisable, and as may otherwise be required by law, is expected to be placed before Shareholders for approval at Pembina's 2019 meeting of Shareholders. A copy of the agreement relating to the current Plan has been filed on Pembina's SEDAR and EDGAR profiles on May 13, 2016 and May 31, 2016, respectively.

Class A Preferred Shares

The Class A Preferred Shares were not intended to and will not be used by the Company for anti-takeover purposes without Shareholder approval. Subject to certain limitations, the Board may, from time to time, issue Class A Preferred Shares in one or more series and determine for any such series, its designation, number of shares and respective rights, privileges, restrictions and conditions. The Class A Preferred Shares as a class have, among others, the provisions described below.

Each series of Class A Preferred Shares shall rank on parity with every other series of Class A Preferred Shares, and shall have priority over the Common Shares, the Class B Preferred Shares and any other class of shares ranking junior to the Class A Preferred Shares with respect to redemption, the payment of dividends, the return of capital and the distribution of assets in the event of the liquidation, dissolution or winding-up of Pembina. The Class A Preferred Shares of any series may also be given such preferences, not inconsistent with the provisions thereof, over the Common Shares, the Class B Preferred Shares and over any other class of shares ranking junior to the Class A Preferred Shares, as may be determined by the Board.

In the event of the liquidation, dissolution or winding-up of Pembina, if any cumulative dividends or amounts payable on a return of capital in respect of a series of Class A Preferred Shares are not paid in full, the Class A Preferred Shares of all series shall participate rateably in: (a) the amounts that would be payable on such shares if all such dividends were declared at or prior to such time and paid in full; and (b) the amounts that would be payable in respect of the return of capital as if all such amounts were paid in full; provided that if there are insufficient assets to satisfy all such claims, the claims of the holders of the Class A Preferred Shares with respect to repayment of capital shall first be paid and satisfied and any assets remaining shall be applied towards the payment and satisfaction of claims in respect of dividends. After payment to the holders of any series of Class A Preferred Shares of the amount so payable, the holders of such series of Class A Preferred Shares shall not be entitled to share in any further distribution of the property or assets of Pembina in the event of the liquidation, dissolution or winding-up of Pembina.

Holders of any series of Class A Preferred Shares will not be entitled (except as otherwise provided by law and except for meetings of the holders of Class A Preferred Shares or a series thereof) to receive notice of, attend at, or vote at any meeting of shareholders of Pembina, unless the Board shall determine otherwise in the terms of a particular series of Class A Preferred Shares, in which case voting rights shall only be provided in circumstances where Pembina shall have failed to pay a certain number of dividends on such series of Class A Preferred Shares, which determination and number of dividends and any other terms in respect of such voting rights, shall be determined by the Board and set out in the designations, rights, privileges, restrictions and conditions of such series of Class A Preferred Shares. Other than as set out below, the material characteristics of each series of Class A Preferred Shares are substantially the same.

The table below outlines the number of outstanding, and the material provisions of, each of the issued series of Class A Preferred Shares.

Notes: