Inter Pipeline Ltd (TSE:IPL) and Pembina granted royalty credits for new petrochemical plants

Two new petrochemical projects in Alberta have been granted subsidies under the provincial government’s Petrochemicals Diversification Program, which was announced in February 2016.

Inter Pipeline Pembina royalty credits

Inter Pipeline Ltd (TSE:IPL) and Pembina granted royalty credits for new petrochemical plants

Inter Pipeline Ltd (TSE:IPL, Mkt cap 10.19B, P/E 20.80, Div/yield 0.14/5.79, EPS 1.35, Shares 360.48M) said on Monday that it will receive up to C$200m in royalty credits from the Petrochemical Diversification Program. Credits were awarded in support of Inter Pipeline’s proposed construction of a C$1.85bn propane dehydrogenation (PDH) facility near Fort Saskatchewan, Alberta.

This new facility will convert low-cost, locally sourced propane into more valuable polymer grade propylene, which is primarily used to create a variety of plastics, fibers and chemicals.

“We are pleased to have been awarded meaningful incentives to assist with the advancement of this important project,” commented Christian Bayle, Inter Pipeline’s president and CEO. “The Petrochemical Diversification Program will help provide long-term economic benefits to Alberta by stimulating new investment and creating high quality employment opportunities.”

Inter Pipeline is also assessing the commercial viability of constructing an additional C$1.3bn processing facility that converts propylene into polypropylene, the company said.

Final investment decisions on both projects are expected to be made by mid-2017.

The second project awarded royalty credits under the Petrochemical Diversification Program is a joint venture between Pembina Pipeline and Petrochemical Industries Company (PIC), based in Kuwait. The partners have been approved to receive up to C$300m in credits to build an integrated PDH and polypropylene (PP) upgrading facility in Alberta’s Sturgeon County.

Royalty credits will be awarded once approved projects are completed. The credits can then be sold to oil or natural gas producers, which can use them to reduce their royalty payments.

Calgary AB based Inter Pipeline Ltd (TSE:IPL) owns and operates energy infrastructure assets located in western Canada and Europe. Inter Pipeline operates in four segments: oil sands transportation business, conventional oil pipelines business, natural gas liquids (NGL) extraction business and the bulk liquid storage business. Its oil sands transportation business consists of the Corridor, Cold Lake and Polaris pipeline systems, which transport petroleum products and provide related blending and handling services in Alberta. Its conventional oil pipelines business involves the transportation, storage and processing of hydrocarbons, as well as midstream marketing blending and handling services. Its NGL extraction business consists of processing natural gas to extract NGLs, including ethane and a mixture of propane, butane and pentanes plus. Its bulk liquid storage business involves the storage and handling of bulk liquid products through the operation of over 10 bulk liquid storage terminals. More from Reuters » 

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Inter Pipeline (TSE:IPL) acquires Canadian NGL midstream assets

Inter Pipeline Ltd (TSE:IPL, Mkt cap 9.17B, P/E 20.04, Div/yield 0.13/5.71, EPS 1.36, Shares 337.03M) has completed its acquisition of the Canadian natural gas liquids (NGL) midstream businesses of Williams and Williams Partners for C$1.35bn in cash.

The deal includes two NGL and olefinic liquids extraction plants located near Fort McMurray, Alberta, a fractionator near Redwater, Alberta and a 420-kilometre pipeline system that connects these facilities.

According to Inter Pipeline, Williams Canada pioneered the process of extracting NGL and olefins from offgas, a byproduct of bitumen upgrading operations. The two extraction plants have the capacity to recover approximately 40,000 barrels per day of NGL and olefins from offgas. The liquids mix is then separated into marketable products at the Redwater fractionator and sold across North America.

As part of the deal, Inter Pipeline has also assumed responsibility for the potential construction of a C$1.85bn propane dehydrogenation facility located near the Redwater fractionator. This facility would convert low-cost, locally sourced propane into higher value polymer grade propylene, a petrochemical product primarily used in plastics manufacturing, the company said.

Calgary-based Inter Pipeline financed the acquisition using the net proceeds from a C$600m subscription receipt offering, C$350m of new term debt, and the balance drawn under its recently expanded C$1.5bn committed revolving credit facility.

“This accretive acquisition is a highly complementary addition to our existing NGL extraction business,” said Christian Bayle, Inter Pipeline’s president and CEO, when the deal was announced on August 8. “Consistent with our disciplined acquisition strategy, we are purchasing this unique and attractive business at a low period in the commodity cycle, and well below original cost. This positions Inter Pipeline to significantly benefit as energy prices strengthen.”

Inter Pipeline Ltd. (TSE:IPL) owns and operates energy infrastructure assets located in western Canada and Europe. Inter Pipeline operates in four segments: oil sands transportation business, conventional oil pipelines business, natural gas liquids (NGL) extraction business and the bulk liquid storage business. Its oil sands transportation business consists of the Corridor, Cold Lake and Polaris pipeline systems, which transport petroleum products and provide related blending and handling services in Alberta. Its conventional oil pipelines business involves the transportation, storage and processing of hydrocarbons, as well as midstream marketing blending and handling services. Its NGL extraction business consists of processing natural gas to extract NGLs, including ethane and a mixture of propane, butane and pentanes plus. Its bulk liquid storage business involves the storage and handling of bulk liquid products through the operation of over 10 bulk liquid storage terminals. More from Reuters »

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Inter Pipeline Posts Record Oil Volume

Inter Pipeline Ltd (TSE:IPL, Mkt cap 10.95B, P/E 31.61, Div/yield 0.12/4.38, EPS 1.06, Shares 326.21M)

Impressive volume levels, particularly in the last three months of year, have enabled oil transporter Inter Pipeline Ltd. to report increased revenue of $1.56 billion in 2014, compared to $1.36 billion in 2013.

Inter Pipeline Posts Record Oil VolumeAs the Calgary Herald reports, the company has invested heavily in its three oilsands pipeline systems in the last two years, resulting in volume of more than one million barrels per day (bpd) as 2014 drew to a close.

For the year as a whole, volumes averaged 912,900 bpd on its Cold Lake, Corridor and Polaris pipeline systems, which represents a gain of 10% over 2013.

"We transported over 1.1 million barrels per day on our oilsands and conventional gathering systems (in 2014), establishing a new record for the fifth consecutive year," Christian Bayle, the firm's president and chief executive, told the newspaper.

Inter showed equally notable gains on its three conventional oil-gathering systems, which transported 205,200 bpd in 2014, a 10% climb on 2013 figures.

As well as reporting higher revenues, the firm noted an improvement in funds from operations, which rose to $564 million from $472 million.

Net income came out of the year in good shape, too, standing at $350 million. This is a significant turnaround from the $47 million loss reported in 2013.

Growth appears to be pretty consistent across the board, with Inter highlighting that all three oilsands pipelines enjoyed a prosperous 2014, including a 300% increase in northbound diluent volumes on the Polaris pipeline system.

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Inter Pipeline Sets Out Reduced Capital Spending Budget For 2015

Inter Pipeline Ltd (TSE:IPL, Mkt cap 10.69B, P/E 30.86, Div/yield 0.12/4.49, EPS 1.06, Shares 326.21M) is the latest Canadian energy company to announce drastic cuts to its capital spending budget for 2015, taking it down to C$400 million, which is less than a third of last year's budget.

Inter Pipeline Reduced Capital Spending Budget 2015As Reuters reports, the energy transportation and storage firm said focus will be firmly on completing work on the C$3 billion expansion of its Cold Lake and Polaris systems, with an additional C$110 million having been allocated to pipeline construction and pump station work.

This means that Inter Pipeline, which operates the largest pipeline gathering system in Alberta's oil sands, will implement a reduced capital program in 2015. Last year, it announced a capital spending budget of C$1.3 billion.

The drop is unlikely to come as a surprise to most, with dozens of other Canadian oil and natural gas producers and oilfield services companies having slashed capital budgets in response to tumbling benchmark crude prices, which have more than halved since June 2014.

Inter Pipeline is setting its sights on growing its oil sands transportation and conventional oil gathering businesses in 2015, spending C$195 million and C$115 million respectively on those areas. However, even those figures represent a significantly smaller outlay than in 2014.

In 2015, organic growth projects are expected to account for approximately C$340 million of total capital expenditures, the company said a statement. The remainder will be spent on sustaining capital requirements across Inter Pipeline's business segments.

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Stockwatch – Inter Pipeline To Invest $100m In Mid-Saskatchewan System Expansion

Stockwatch – Canadian energy infrastructure company Inter Pipeline Ltd (TSE:IPL, Mkt cap 10.52B, P/E – , Div/yield 0.11/3.95, EPS -0.22, Shares 322.13M) has unveiled plans to invest $100 million in the expansion of its Mid-Saskatchewan oil lines with the aim of adding 95,000 barrels per day of new capacity.

Stockwatch - Inter Pipeline plans invest $100 million expansion Mid-Saskatchewan oil lines

Stockwatch – Inter Pipeline Ltd plans to invest $100-M in the expansion of its Mid-Saskatchewan oil lines

The company, which operates regional pipeline systems in Western Canada, said it has sealed contracts with five oil producers that have agreed to ship oil on the lines for between four and ten years.

As part of the expansion project, Inter Pipeline will add 90 kilometres (56 miles) of new lines to its Saskatchewan system, including 50 kilometres of new mainline pipe and 40 kilometres of pipeline laterals, and related pumping and metering facilities. The first phase of the project is expected to become operational later this year and to be fully completed by the second quarter of 2015. Initially, the new mainlines will operate at less than 50% of capacity. This will be gradually increased as oil production rises.

Oil production in Saskatchewan has been growing at a rapid pace owing to an increase in drilling activity and the use of innovative well completion technologies in the area. Over the last two years, throughput volumes have doubled to more than 70,000 barrels per day and much of the Mid-Saskatchewan oil system has been operating at or near full capacity, Inter Pipeline said.

Inter Pipeline expects the project to fetch between $25 million and $30 million in incremental EBITDA a year.

The investment is Inter Pipeline’s most significant expansion of a conventional oil pipeline system, the company’s president and chief executive Christian Bayle commented. The expansion will help provide an efficient transportation solution for customers and flexibility to ensure growth in the future, he said.

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