Good afternoon. Welcome to the 2023 annual meeting of shareholders of Pembina Pipeline Corporation. My name is Henry Sykes, Chair of Pembina's Board of Directors, in accordance with our bylaws, I'll provide over this meeting as chair. Before we proceed with the rest of the meeting, I'd like to start with a land acknowledgement, recognizing that we have people joining us today from numerous locations. As Pembina continues to build strong relationships and partnerships with indigenous communities, land acknowledgments are one way for us to communicate our respect for the land that we all share. Pembina acknowledges our traditional hosts and thanks them for their graciousness in welcoming us to carry out work in their traditional territories. Pembina plays a role in the economic reconciliation with indigenous peoples and their respective communities where Pembina's operations take place.
We acknowledge the future generations and the collective responsibility we all have to these lands. Indigenous people are the traditional stewards of the lands and waters where each of us work and choose to live. We further acknowledge that the Indigenous peoples have inhabited these lands and waters since time immemorial. Indigenous peoples' territory, culture, truths, traditions, teachings, and languages are sacred, and we're thankful to be here today as a guest. This meeting is being held as a virtual-only meeting this year again. We've ensured that this virtual meeting offers shareholders the opportunity to participate, submit questions, and vote at the meeting. Following the formal portion of the meeting, we'll have a presentation regarding the company's activities by our President and CEO, Scott Burrows.
After Scott's presentation, we'll have a question and answer session in which time all participants will have the opportunity to ask questions unrelated to the matters to be voted on at today's meeting. If you have any questions about Pembina which don't specifically relate to an item of business to be voted on at the meeting, please feel free to submit those questions at any time, and they'll be addressed during the question and answer session. We'll do our best to answer all questions, but if for any reason we can't do so during the meeting, we'll do our best to engage with shareholders after the meeting. Joining me today on the webcast are Scott Burrows, our President and Chief Executive Officer, and Jason Metcalf, Vice President, General Counsel, and Corporate Secretary of Pembina.
Joining us remotely are a number of representatives of Pembina's executive management team, employees, and external advisors. I also wanna welcome each of the other directors of Pembina who are all joining us remotely today. We'll move on to the formal business of the meeting. The meeting will now come to order. In accordance to our bylaws, I appoint Jason Metcalf to serve as secretary of the meeting. In the unlikely event we experience any technical difficulties or disruptions and I'm unable to chair the meeting, Jason Metcalf will be appointed with the consent of the meeting in accordance with our bylaws to also chair the meeting in my absence so the meeting can continue as planned. I also appoint Kyle Gould, a representative of Pembina's registrar and transfer agent, Computershare Trust Company of Canada, to act as scrutineer for this meeting.
I will now ask Jason to address a few housekeeping matters related to the formal proceedings. Jason?
Thank you, Henry. If at any time during the meeting you experience technical difficulties, please refer to the technical support button on the broadcast section of your screen. The platform we are using today allows our registered shareholders and duly appointed proxy holders the ability to vote online and ask questions during the formal part of the meeting. We encourage shareholders and duly appointed proxy holders who have specific questions on an item of business to submit your questions as soon as possible by clicking on the question icon on your screen. This will allow us to address your question at the most appropriate time during the meeting. If your question relates to a voting matter, you will submit your question when we reach that item. When submitting a question, please identify yourself and indicate whether you are a shareholder or a proxy holder.
Questions not related to a voting matter will be answered during the question and answer session after our Chief Executive Officer's presentation. To ensure that the meeting is conducted in a manner that is fair to all shareholders and to address questions from as many shareholders and duly appointed proxy holders as possible, we request that each submission be limited to one question. We also request that each question be in one submission within the character limit provided on your screen and not spread out over multiple submissions. As we may receive multiple questions of a similar theme, we may also exercise discretion in responding to questions, including grouping or paraphrasing questions of a similar theme.
While we will try and answer all questions, we will do our best to engage with shareholders after the meeting if there are any questions that we are unable to get to during the meeting. To assist us in doing so, please provide your contact information with your question. Let's move on to voting. All items of business for shareholder approval will be conducted by ballot. If you are a registered shareholder or a duly appointed proxy holder and have already voted in the meeting materials that were sent to shareholders, you do not need to vote again during this meeting, even if the voting item appears on your screen. Any votes you cast at this meeting will revoke your prior vote.
If you are a registered shareholder or a duly appointed proxy holder and have not yet voted, you may vote during the meeting by clicking on the voting icon at the top of your screen and selecting voting options on each ballot option. The polls will be open for all items of business for shareholder approval at the start of the meeting. This will allow you to vote on each item immediately, or if you prefer, you may wait until the conclusion of discussion on each item prior to casting your vote. Once discussion has concluded on all items of business, we will pause for a moment to ensure all votes are entered. We will then declare voting closed on all matters of business. The results of the votes will be announced prior to the close of the meeting.
For meeting efficiency, we have asked certain registered shareholders or duly appointed proxy holders to move and second motions proposed at this meeting. This is not intended to limit discussion or to suggest that other registered shareholders and duly appointed proxy holders are not able to move or second motions. Registered shareholders and proxy holders should feel free to initiate discussion on any motion at the appropriate time.
Thank you very much, Jason. I've been advised by Computershare that the meeting materials were duly delivered to shareholders, that a quorum is present. Accordingly, I declare that the meeting has been duly called and is properly constituted for the transaction of business. Computershare's Affidavit of Mailing and the Scrutineer's Report on Attendance will be filed by the Secretary with the minutes of this meeting. The reading of the notice of meeting will be dispensed with. I now declare the online polls open on each item of business for shareholder approval. Each person entitled to vote should now see voting choices displayed at the top of their screen. We will now commence with the formal business of the meeting. The first item of business is the presentation of the financial statements for the fiscal year ended December 31st, 2022, and the auditor's report thereon.
These materials have been mailed to all registered shareholders and to beneficial shareholders who requested a copy of the materials. No action is required by shareholders on this item. The next item of business is the election of the directors. In accordance with our bylaws, the board of directors has fixed the number of directors to be elected today at 12. Pembina's information circular for the meeting sets forth management's proposed 12 director nominees. Each of the nominees is qualified and has consented to his or her nomination as a director today and will serve for a term of one year, which expires at the 2024 annual meeting of shareholders or until their successors are duly elected or appointed.
As we didn't receive any additional nominations in accordance with our advance notice bylaw, I'll ask the Secretary to please read the names of those 12 individuals who have been named and described in the information circular to serve as directors of Pembina.
Thank you, Mr. Chair. Management director nominees are as follows: Henry Sykes, Anne-Marie Ainsworth, Scott Burrows, Cynthia Carroll, Ana Dutra, Robert Gwin, Maureen Howe, Gordon Kerr, David LeGresley, Andy Mah, Leslie O'Donoghue, and Bruce Rubin.
Thank you, Jason. All of the director nominees other than Mr. Burrows are independent, and all of the nominees currently sit on our board. The nominees bring a diverse set of skills and experience to our board, and further information with respect to each one is set forth in the information circular for this meeting. The biographies of the director nominees can be found on pages 16 through 27 of the information circular. I would like to take an opportunity to say a few words about Andy Mah, who joined the board in February. Andy has over 40 years of experience in the oil and gas industry and significant leadership experience in the same industry, including serving as CEO of Advantage Energy for nearly 12 years until his retirement on December 31st, 2021.
Thrilled to have Andy on the board and believe he'll make a meaningful contribution and support Pembina's continued success. Now, may I have a motion to elect the 12 nominees as directors of Pembina Pipeline Corporation?
Mr. Chair, I move to nominate the 12 individuals named described in the information to serve as directors of Pembina and hold office until the next annual meeting of shareholders or until their successors are duly elected or appointed.
I second the motion.
We'll now open the floor to any questions on this item of business. Jason, can you please let me know if we've received any questions on this item?
Mr. Chair, we have not received any questions in relation to this item of business.
Thanks, Jason. If there's no discussion, I've been advised that sufficient votes have been cast in advance of the meeting to elect the 12 nominees as directors of Pembina. In accordance to our majority voting policy for director elections, we will proceed with the voting on this matter. Only registered shareholders or their duly appointed proxy holders can vote by online ballot by selecting the applicable voting options displayed on their screens. We'll turn to the next item of business, which is the appointment of KPMG LLP as the auditors of Pembina. May I have a motion that the firm of KPMG LLP of Calgary, Alberta, be appointed auditors of Pembina until the next annual meeting of shareholders and that their remuneration be fixed by Pembina's board of directors upon recommendation of its audit committee?
Mr. Chair, I move that KPMG LLP be appointed as the auditors of Pembina until the next annual meeting of shareholders, and that their remuneration be fixed by the directors of Pembina.
Thank you.
I second the motion.
Thank you. Thank you both. You heard the motion, it's now open for questions. Jason, have we received any?
Mr. Chair, we have not received any questions in relation to this item of business.
As no further comments have been received on this motion, I'll now proceed to the next item of business, and that is voting on our approach to executive compensation. The text of the resolution is set forth on page 14 of the information circular for this meeting. This is an advisory vote, so the results will not be binding on Pembina's board. The board will, though, consider the outcome of the vote as part of its ongoing review of executive compensation. If a significant number of shareholders oppose the say on pay resolution, the board will consult with shareholders to understand their concerns and then review our approach to executive compensation with their concerns in mind. At this time, I would ask to have a motion to approve the resolution as set forth on page 14 of Pembina's information circular, accepting Pembina's approach to executive compensation.
Mr. Chair, I move that the resolution as set out on page 14 of Pembina's information circular, accepting Pembina's approach to executive compensation, be approved as a non-binding resolution of Pembina's shareholders.
I second the motion.
Thank you. You've heard the motion, and it's now open for questions. Jason?
Mr. Chair, we've received no questions on this motion.
Thank you. There being no further questions, I'll note that this was the final agenda item, the last matter to be voted on at today's meeting. For those of you who have not yet cast your votes, please do so now. I'll pause for one minute before closing the polls, so you'll hear one minute of silence. All right, I'm back. The polls are now closed, and this concludes the voting at today's meeting. I have received the scrutineer's report on the ballots required for each item, each of the items of business, and the results are as follows. In respect to the election of directors of Pembina, I'm pleased to announce that the election of each of the director nominees has been approved by a majority of the votes cast. Accordingly, I declare the 12 directors nominated hereby elected as directors of Pembina.
With respect to the appointment of Pembina's auditor, I declare the motion regarding the appointment of KPMG LLP as the auditors of Pembina to be passed. Finally, the non-binding resolution accepting Pembina's approach to executive compensation has been approved by approximately 94.03%, that seems much more than an approximation, of the votes cast. Accordingly, I declare the non-binding resolution accepting Pembina's approach to executive compensation to be passed. Report disclosing the number of votes cast in favor, against, and withheld from voting in respect of each item of business voted on at this meeting will be filed on SEDAR promptly following the meeting, and a report on the election of each director will be disclosed in a press release to be issued following the meeting.
As there is no further business to be considered at the meeting, may I please have a motion to terminate the formal portion of this meeting.
Mr. Chair, I move this meeting be terminated.
I second the motion.
Thank you. I declare the formal portion of the meeting terminated. We'll now have a presentation regarding Pembina's activities by our President and CEO, Scott Burrows, followed by a question and answer session, during which we would be pleased to answer any questions you might have. As a reminder, if you wish to ask a question, please click on the question icon, type in and submit your question. You may also submit your questions during Scott's presentation. Before I hand off to Scott for his business presentation, though, I wanna say a few words today about Randy Findlay, who is retiring from the board at this meeting. Randy joined the Pembina board in 2007 and was Chair of the Board from 2014 until January 1st of this year.
During those years, Randy led Pembina's board through a period of impressive growth, through the pandemic years, and through a transition to new corporate leadership. Throughout those years, Randy exemplified the best aspects of a company director. While always focused on the interests of our shareholders, Randy never failed to also take into account the interests of other stakeholders, including, in particular, our employees. He did all of this while exhibiting a degree of collegiality and fundamental decency in all of his dealings. As Randy retires, I wanna thank him on behalf of our stakeholders for all that he's done on their behalf. I also wanna thank him on behalf of the board, as well as personally, for his hard work, his dedication, and his example.
Randy's presence will be missed, and we wish him well. Now over to Scott.
Thanks, Henry, and good afternoon, everyone. I am pleased once again to have the opportunity to present at this year's annual general meeting. There's a lot to cover, including our record 2022 financial results, a variety of commercial developments over the past year, and refreshed strategic priorities. We are very proud of our accomplishments over the past year as we strive to build a resilient and thriving business and to ensure Pembina's future can be as successful as its past. But first, I would like to join Henry in thanking our outgoing chair, Randy Findlay, for his mentorship as well as his contribution and steadfast commitment to Pembina over his 16 years on the board. Randy's leadership has been integral to Pembina's culture and to building a solid foundation from which we can realize future successes.
Again, I wanna thank Randy on behalf of the other board of directors, our employees, and on a personal note as well. Thank you, Randy. Along with transitions at the board level, over the past year, Pembina has strengthened its leadership team. Cameron Goldade was officially named Senior Vice President and Chief Financial Officer following a rigorous search process. Over the last eight years, Cam has been a significant contributor to the success of our organization through his consistent focus on financial discipline, risk management, and capital allocation. Recently, Chris Scherman was promoted to Senior Vice President, Marketing and Strategy Officer. Since joining Pembina in 2012, Chris has held various legal and commercial roles, being Vice President, General Counsel, and Corporate Secretary, and most recently, Vice President, Marketing.
Along with the other officers, Stu, Eva, Jaret, and Janet, and leaders across the company, I firmly believe that we have the right team in place. Before we proceed, I would like to remind you that some of the comments made today may be forward-looking in nature and are based on Pembina's current expectations, estimates, judgments, and projections. We also refer to non-GAAP measures in this presentation. More information about these statements and measures can be found in our annual and quarterly disclosure documents. Now getting into the meat of the presentation. On the slide, we have the highlights since our last annual meeting, and they were quite extensive. This slide deck will be available on our website, and this first page summarizes many of our accomplishments over the past year.
I will speak to most of these throughout my presentation today, suffice to say, 2022 was a very successful year. At Pembina, we are an organization that cares not only about results, how those results are achieved. While we strive to deliver extraordinary energy solutions the world can thrive, that is our purpose. Together, we are committed to creating a great culture. It's my belief that values drive behavior and behavior drives culture, codifying Pembina's long-standing values was top of mind when I was appointed CEO. I am proud to be part of an organization that is guided by these core values: safe, trustworthy, respectful, collaborative, and entrepreneurial. Equally as important as codifying these values into our company was reviewing Pembina's corporate strategy.
Through a year-long effort in 2022, management and the board undertook this important work with the goal of ensuring Pembina can remain resilient and continue to thrive, not just for several years, but for decades. The four strategic priorities shown on this slide were informed by an analysis of scenarios built around two key themes that we expect will be the driving forces that could most impact our business in the years to come. These two themes are the pace of decarbonization and the extent of globalization in energy markets. Over the course of last year, we analyzed our business through a commodity-by-commodity lens and considered the potential impacts on Pembina's business, both risks and opportunities under different scenarios.
The outcome is a strategy which builds on our strengths and continues to invest in our core businesses, while also capitalizing on opportunities to leverage our assets and expertise into new services in the transition to a lower carbon economy. First, to be resilient, we will sustain, decarbonize, and enhance our businesses. This priority is focused on strengthening and growing our existing franchise and demonstrating environmental leadership. Second, to thrive, we will invest in the energy transition to improve the basins in which we operate. We will expand our portfolio to include new businesses associated with lower carbon commodities. Third, to meet global demand, we will transform and export our products. We will continue our focus on supporting the transformation of Western Canadian Sedimentary Basin commodities into higher margin products and enabling more coastal egress. Fourth, to set ourselves apart, we will create a differentiated experience for our stakeholders.
We remain committed to delivering excellence for our four key stakeholder groups. When we speak about our stakeholders, it is the four groups shown here. We remain committed to being in business for all of them, not just one. In executing Pembina's strategy, it is our ambition that employees will say we are the employer of choice and value our safe, respectful, collaborative, and inclusive work culture. Communities will welcome us and recognize the net positive impact of our social and environmental commitment. Customers will choose us first for reliable and value-added services. Investors will receive sustainable industry-leading total returns. Moving on to our diversified and integrated transportation and midstream assets. The full scope of our business is shown on this map.
Our portfolio of assets extends across the Western Canadian Sedimentary Basin and into northeastern United States and provides industry-leading service to customers for all of their commodities, natural gas, ethane plus, propane plus, crude oil, and condensate. We are able to transport nearly 3 million barrels per day on our pipelines and process about 5.5 Bcf a day of natural gas. We have the largest fractionation complex in Canada, plus a significant portfolio of above and below-ground storage assets. We have built an extensive marketing business around it all. This allows Pembina to optimize its assets and ensures we can get our customers' products to the best markets and enhance net backs.
Given the asset footprint you saw on the previous page, we have developed our service offerings around the Pembina Store, where customers can access multiple services across different value chains that connect producers of oil and gas products on the left and consumers of those products on the right. Each of these value chains is interconnected, and it is the integration between them that provides Pembina's competitive advantage and creates tremendous value for our customers, as well as Pembina and its investors. A few slides ago, I highlighted our strategic priorities and said we would build on our strength by continuing to invest in our core businesses while also capitalizing on opportunities to leverage our assets and expertise into new services in the transition to a lower carbon economy. This slide highlights the development opportunities we consider to be in strategy for Pembina.
This includes many low-carbon energy projects we can do to reduce our emissions, such as expanding the use of wind power through power purchase agreements and building cogeneration plants to power our facilities. We are pursuing opportunities in the LNG space and have presented a vision for a carbon capture and storage system, both of which I'll speak about in a moment. We are also actively pursuing projects related to new products such as ammonia, hydrogen, and methanol. This means that the Pembina Store may not look the same in the future as it does today. We will create more value if we continue to enhance our services and respond to our customers' needs.
The opportunities we are pursuing around the energy transition and low-carbon solutions mean the Pembina Store could have a whole new value chain around the capture, transportation, and sequestration of CO2 for our customers in multiple industries. There are also operational opportunities to reduce emissions at our facilities and to capture our own CO2. Projects like Cedar LNG will help reduce global emissions. Pembina does not need to be active in all areas of energy transition, we certainly have ample opportunities to contribute to a lower carbon economy and a more sustainable future by leveraging our core businesses and areas of expertise. I will now turn to what Pembina delivered over the past year.
2022 was a record financial year, with Pembina generating Adjusted EBITDA of CAD 3.746 billion, a 9% increase over 2021, driven by growing volumes on key systems and a very strong performance from the marketing business. Of particular note, volumes on Pembina's conventional pipeline systems, which generally serve as a good proxy for Pembina's broader business and activity in the basin, were approximately 6% higher in 2022 than in 2021. The momentum in the business continued into 2023, as evidenced by a strong first quarter performance. Pembina generated Adjusted EBITDA of CAD 947 million, driven by growing volumes in both the pipeline and facilities due to increased upstream activity, which was offset by an outage on the northern pipeline system.
Another strong quarter from the marketing business also contributed to first quarter results. 2023 Adjusted EBITDA is expected to be in the range of CAD 3.5 billion-CAD 3.8 billion relative to 2022. The midpoint of that range reflects an approximately 4% increase in Adjusted EBITDA when excluding the marketing and new venture segment. Our fee-based businesses in the pipelines and facilities segments are expected to benefit from growing volumes and increased utilization across our asset base, along with higher tolls, with marketing being impacted by lower commodity prices coming off an all-time record year. An important milestone achieved in 2022 was the creation of Pembina Gas Infrastructure, or PGI, a 60/40 joint venture with our partner KKR.
PGI brought together three complementary platforms to create a premier, highly competitive Western Canadian gas processing entity with the ability to serve customers from north-central Alberta to Northeast BC and to pursue future growth opportunities in a capital efficient manner. The combination of three adjacently located high-quality processing platform enables efficiencies and an enhanced customer service offering while providing a wider suite of commercial opportunities. We see tremendous opportunities to enhance utilization across PGI suite of assets, providing incremental revenue with minimal additional operating or capital costs. As you can see on the map, the assets of the respective companies are very complementary and can serve customers through 25 gas processing facilities, providing approximately 5 Bcf per day of capacity.
With a platform that spans the Montney and Duvernay trends, our ability to provide reliable, safe, and high-value services to our customer will create value for them as it will for both Pembina and KKR. Commercially, we have successfully secured incremental volumes through fee for service firm contracts with a number of existing customers at both the K3 and Wapiti facilities. The optionality and flexibility that comes with PGI's gas gathering and processing footprint is attractive to producers throughout the Montney. We continue to be in conversations with a number of customers regarding debottlenecking expansions of a number of the facilities. Further, on the commercial front, Pembina has been incredibly successful over the last 18 months, signing new long-term agreements and contracts. We entered into long-term midstream service agreements with three premier Northeast BC Montney producers.
The Northeast BC Montney is expected to be a big driver of growth through these agreements. We believe we have secured the transportation, fractionations, and marketing rights to a significant portion of forecasted growth in the area. We've been very successful in renewing contracts and signing new contracts for incremental volumes on the Peace Pipeline. For example, since mid-2022, we have recontracted all volumes from recent and near-term contract expirations and executed new contracts with existing customers for approximately 65,000 barrels per day of incremental volume. Similarly, the producer response at our Redwater Fractionation Complex has been positive as we have renewed existing contracts and executed incremental contracts with both current and new producers. We saw tremendous success on Alliance Pipeline, which is now fully contracted for the next two years. Through this recontracting, we have greatly enhanced Alliance's long-term contractual pro-profile.
Pembina signed an agreement with an anchor customer that allowed us to announce the reactivation of the Nipisi pipeline to serve the rapidly growing Clearwater oil play. Discussions continue with several Clearwater area producers regarding potential additional commitments. Finally, we extended a contract to supply ethane on a long-term basis to a key customer. Petrochemical consumption of ethane is an integral part of supporting the NGL value chain, and Pembina is an important participant in Alberta's supply of ethane feedstock. I will turn now to our outlook for the future. In addition to the current volume growth we are seeing on our key systems, we are optimistic about the longer-term future of the Canadian energy market. We continue to observe significant positive momentum that we expect will ultimately result in producers sanctioning new developments, leading to significant additional growth.
The formations in which we operate in service, including the Montney, Duvernay, and Clearwater, are all highly economic at current strip commodity prices, and recent M&A in the basin has driven producers to increase activity by high-grading inventory and improving efficiencies. Longer term, the industry is readying itself to capitalize on new egress options, including LNG development on Canada's west coast and the Trans Mountain pipeline expansion, a continued build-out of Alberta's petrochemical industry, and the potential for a meaningful carbon capture industry. Against this backdrop, Pembina expects the commercial successes we have seen recently and the current growth in the basin will continue for the foreseeable future. Pembina currently has about CAD 1 billion of projects underway with another CAD 4 billion of additional projects under development. We continue to progress the phased expansion of our Peace Pipeline system.
Following the phase seven and phase nine expansions placed into service in 2022, we are excited that the phase eight expansion is progressing towards completion in 2024 and is trending on time and under budget, continuing our track record of successful pipeline execution. Collectively, these pipeline expansions will accommodate the growth we are seeing and allow Pembina to continue to provide industry-leading transportation services to our producing customers. Pembina also recently approved the construction of RFS IV, a new 55,000 barrel per day propane plus fractionator at the Redwater Complex. RFS IV is expected to cost approximately $460 million and will leverage the design and engineering of its existing facilities. I will speak to this project in more detail on the following slide.
As we continue to grow the business, Pembina has been able to collectively execute major projects in the pipelines and facilities businesses on time and under budget. Over the last two years, we've collectively brought the Peace phase seven and phase nine expansions, as well as the Empress Cogen on stream and under budget. Yesterday announced that the Peace phase eight expansion is trending under budget. In addition to the in-flight projects, Pembina has over CAD 4 billion of projects under development, including expansions of our existing assets, such as new gas processing facilities, new pipeline terminals, pipeline connections, cogeneration facilities, and additional NGL extraction at existing plants. This also includes our value chain enhancing projects such as Cedar LNG and the Alberta Carbon Grid. We are confident in our ability to convert this attractive portfolio of highly economic potential projects into secured investments.
With an increase in customer liquid commitments, specifically in Northeast BC, we are building RFS IV, an expansion at our Redwater Complex. The existing facility is highly utilized and RFS IV is needed to meet customer demand. The decision to proceed with RFS IV ensures Pembina's customers will benefit from a timely solution to growing volumes and constraints arising out of high utilization rates across the industry. The Redwater Complex is underpinned by long-term take-or-pay contracts, and in recent quarters, Pembina has successfully extended existing contracts and signed incremental new contracts. In addition to recent contracting success, the commercial agreements with three leading Northeast BC producers that I referenced earlier, are expected to provide significant volumetric support for the new facility.
In an increasingly competitive environment, Pembina continues to demonstrate that customers value the certainty and dependability of our infrastructure, the ability to execute projects safely on time and on budget, our competitive fees, and the company's overall integrated service offer. In line with our strategic priorities, Pembina and the Haisla Nation continue to make strides towards a final investment decision on the proposed Cedar LNG project. Pembina is excited to be partners with the Haisla Nation to develop a 3 million ton per year floating LNG facility, strategically positioned to leverage Canada's abundant natural gas supply and British Columbia's growing LNG infrastructure to produce industry-leading, low carbon, cost-competitive Canadian LNG for overseas markets. Recently, Cedar LNG took a significant step forward on both the regulatory and commercial front. The project received a BC provincial environmental assessment certificate and a positive decision statement from the federal government.
A memorandum of understanding was entered into with ARC Resources for a 20-year liquefaction services agreement for half of the capacity of the project, and we are working diligently with ARC towards finalizing the definitive agreement. Further activities related to engineering, regulatory, commercial discussion, and financing will continue throughout 2023 before an FID is reached. Following the theme of accelerating Pembina's strategic priorities, we are delighted to be partnering with TC Energy to jointly develop a proposed world-scale carbon transportation and sequestration system known as the Alberta Carbon Grid. The first phase of the system is in the Industrial Heartland project, which will have the potential of transporting and storing up to 10 million tons of carbon dioxide annually.
The project could grow over time to transport and sequester up to 20 million tons of CO2 per year, positively contributing to Alberta's lower carbon economy while creating sustainable long-term value for Pembina and TC stakeholders. We believe Pembina and TC are uniquely positioned to deliver this project given their collective skills and extensive networks of pipeline infrastructure, and we look forward to progressing this important project over the next few years. As I said in the opening slides, we strive to deliver benefits to all of our stakeholders, and of course, this includes delivering value to our shareholders. Our ability to do that over the long term rests on executing our strategy within the financial guardrails and the decisions we make around capital allocation. Part of delivering value to shareholders is growing and diversifying the company while maintaining a consistent approach to risk.
The concept of the financial guardrails remain core to how Pembina manages and protects its business, and we will continue to execute within them. They've also been a valuable tool in communicating our plans to our shareholders. As a quick recap of our guardrails, first, we want at least 80% of our Adjusted EBITDA to come from fee-based sources as opposed to commodity-exposed sources. Second, we target less than 100% payout of fee-based distributable cash flow, meaning that we are not reliant on the commodity-exposed portion of our business to pay our dividend. Third, we target at least 75% of our credit exposure to be with investment-grade and secured counterparties. Fourth, we strive to maintain a strong BB B credit rating. Following a record 2022, Pembina demonstrated its commitment to further strengthening the balance sheet by paying down debt.
We are positioned favorably relative to our leverage targets necessary to preserve the strong BBB credit rating, which is foundational to our strategy. Recent and continued delevering has made us more resilient in creating greater flexibility around future capital allocation decisions. In 2022, we took a balanced approach to capital allocation. In addition to paying down debt, we repurchased CAD 350 million of common shares and redeemed CAD 300 million of preferred shares. Our approach to capital allocation remains unchanged. The priorities have always been focused first on a strong balance sheet. Second comes the security of our dividend. We recognize that our investors depend on the income they receive through the dividend. We remain committed to a stable and growing dividend over the long term.
Thirdly, our track record shows that we can add strategic and financial value through investment of accretive growth capital. We will allocate any remaining residual cash flow either to debt reduction in preparation for future capital investment or back to shareholders via incremental dividends or share repurchases. In 2023, we expect cash flow from operating activities to exceed dividend payments and the capital expenditure program, with the incremental free cash flow expected to be used to pay down additional debt, further strengthening our balance sheet and preparing the company to fund future capital projects if sanctioned. As discussed earlier, we expect to remain firmly within the financial guardrails with ample liquidity and our leverage metrics are expected to remain well within the ranges for a strong BBB credit rating.
Yesterday, we raised the quarterly dividend by 2.3%. This follows a dividend increase of 3.6% in the fourth quarter of 2022. The combined increase of the past year is about 6%. Pembina has paid more than $12 billion in common share dividends since inception. Importantly, has never cut or suspended its dividend. Over the past 10 years, we have grown the dividend on an average of approximately 5% per year. We remain committed to executing within the financial guardrails and our disciplined approach to capital allocation has ensured our dividend remains safe. In 2022, our payout ratio, that is our dividends divided by our adjusted cash flow from operating activities, was under 60%, highlighting the significant cushion between the amount of cash we are generating and the dividend we are paying.
Pembina has a long history of returning capital to shareholders this way, and we look forward to continuing to grow the dividend over time to match the growth in Pembina's cash flow. Over the past decade, shareholders have been rewarded with a total shareholder return of approximately 140%, outperforming the major comparable indices. That is a testament to Pembina's growth and resilience through market cycles and world events. We are extremely proud of this result and intend on continuing to provide industry-leading shareholder returns in the future. This slide summarizes Pembina's value proposition. The full slide deck is available for download. Rather than go through this point by point, let me offer some closing thoughts on where we have been and where we are headed. Over the past 68 years, Pembina has demonstrated its ability to reliably serve its stakeholders.
More recently, since 2011, we have deployed nearly CAD 14 billion in capital expenditures and made several transformational acquisitions, growing Pembina's enterprise value by over 500% and delivering our investors a total return of over 300%. We have provided our customers with an expanding platform of timely, reliable, and value-enhancing transportation and midstream services through our integrated value chain. We've been recognized as a top employer and demonstrate a visible commitment to employee equity, diversity, and inclusion that helps us attract, retain, and develop the best talent available because people wanna work for a company who leads with values of which they are proud to be associated with. Finally, we've grown our presence in communities throughout North America and developed strong and mutually beneficial relationships with First Nations, furthering economic reconciliation. I'm extremely proud of all that the team has accomplished.
We are not resting on past successes. Our entire organization is focused on how we can remain resilient and thrive well into the future. Pembina is positioned at the nexus of the industry in Canada today and has an enormous opportunity to be part of a bright future, one where we continue to invest in our legacy businesses to ensure secure and reliable supplies of hydrocarbon-based energy to support the global economy, while at the same time, taking concrete steps to support the ongoing energy transition. I remain optimistic about the state of the Canadian energy market and believe we are poised to deliver another strong year, and I'm even more so looking forward to seeing what we, together with our stakeholders, will accomplish with the years to come.
Thank you to the board of directors and my colleagues for the opportunity to lead this amazing company. Thank you to all of Pembina's stakeholders for their continued support. At this time, we would be pleased to answer any questions that you may have. If you wish to ask a question, please submit it using the online platform. In an online format, we may receive questions of a similar theme. Your specific questions may be paraphrased and similar questions may be combined in the interest of efficiency in addressing as many themes as possible. We will pause for a moment to review the incoming questions.
Scott, we've received no questions. Thank you very much for that presentation. On behalf of the Board, I'd like to thank all of our shareholders for joining us today and for your ongoing support. The Board is committed to working diligently on your behalf.
Thanks, everyone, for joining us today. Stay safe and have a great weekend.