Inter Pipeline announces US$ 100 million expansion

Inter Pipeline Ltd. has announced the execution of binding commercial agreements supporting a US$ 100 million expansion of its Mid-Saskatchewan pipeline system.

 In aggregate, the new agreements are expected to generate approximately US$ 25 - 30 million in incremental EBITDA on an annual basis. Five oil producers have entered into ship or pay contracts to backstop the project with terms ranging from 4 - 10 years. Inter Pipeline expects the expansion to enter commercial service in phases beginning in late 2014 with the project fully completed by the Q2 of 2015.

With increased drilling activity and the application of new well completion technologies, oil production in the area serviced by the Mid-Saskatchewan pipeline has grown rapidly. Throughput volumes have doubled to over 70 000 bpd over the last two years with much of the Mid-Saskatchewan system operating at or near full capacity.

The US$ 100 million expansion program will involve the construction of over 50 km of new mainline pipe, 40 km of new pipeline laterals and associated pumping and metering facilities. Once the new pipelines are in service, approximately 95 000 bpd of new capacity will be added to the system to handle oil volumes from the new battery connections and provide capacity for future third party connections. Inter Pipeline expects the new mainlines in aggregate to initially operate at less than 50% capacity, with utilisation rising over time as area production increases.

"This high return investment is the largest expansion of a conventional oil pipeline system in our company's history," stated Christian Bayle, President and Chief Executive Officer of Inter Pipeline. "It provides a capital-efficient transportation solution for our current customers as well as operational flexibility to accommodate significant future growth."

Adapted from press release by Hannah Priestley-Eaton

Read the article online at: https://www.worldpipelines.com/business-news/15072014/inter_pipeline_announces_us_100_million_expansion/