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Inter Pipeline Plans $3.5 Billion Petrochemical Plant Expansion in Alberta, Canada

12/18/2017
Inter Pipeline Ltd. authorized construction of a $3.5 billion world-scale integrated propane dehydrogenation and polypropylene plant in Strathcona County, Alberta, Canada. The facility will be near Inter Pipeline’s Redwater Olefinic Fractionator.

The Heartland Petrochemical Complex will be designed to convert locally sourced, low-cost propane into 525,000 tonnes per year of polypropylene, a high value, easy to transport plastic used in the manufacturing of a wide range of finished products. Construction of the complex will continue in early 2018 with completion scheduled for late 2021.

“Alberta is an ideal location to construct a world-scale propane based petrochemical operation,” Christian Bayle, Inter Pipeline’s President & CEO said. “Driven by attractive feedstock and utility costs, the Heartland Complex is expected to be one of the lowest cost polypropylene producers in North America. This dynamic should result in attractive profit margins given the premium pricing this plastic currently receives in the North American market.”

"We're excited to see this new investment that will create thousands of good-paying, value-added jobs and help diversify Alberta's economy,” said Margaret McCuaig-Boyd, Alberta’s Minister of Energy. “Moving ahead with this world-class facility shows our Petrochemicals Diversification Program is working to attract new investment and make life better for Albertans by creating new economic opportunities."

Facility design is well advanced with approximately $400 million invested to date in engineering, procurement and early civil works, company officials said.

Other construction activities associated with the project include product storage facilities and rail loading assets to facilitate the transport of polypropylene pellets to various North American markets.

“This investment represents the largest organic growth project in our history, and a key part of Inter Pipeline’s growth strategy,” added Bayle. “The Heartland Complex is highly complementary to our existing natural gas liquid processing activities and is structured to provide a new source of material long-term cash flow.”

When contracting is complete and the complex is in operation, Inter Pipeline expects to earn approximately $450 million to $500 million per year in long-term average annual EBITDA, a company spokesperson said. This represents a strong return on invested capital and is expected to be accretive to forecast funds from operations per share.

Inter Pipeline will benefit from $200 million of royalty credits received from the Government of Alberta’s Petrochemical Diversification Program. The credits were provided in support of the construction of the propane dehydrogenation plant and will be monetized over a three-year period once the complex is operational.

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