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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