Inter Pipeline Fund
TSX : IPL.UN

Inter Pipeline Fund

April 14, 2009 09:30 ET

Inter Pipeline Fund Announces $72 Million Expansion Project on Bow River Pipeline System

CALGARY, ALBERTA--(Marketwire - April 14, 2009) - Inter Pipeline Fund ("Inter Pipeline") (TSX:IPL.UN) announced today that it will invest approximately $72 million to expand oil delivery capabilities on the Bow River Pipeline system. The project will allow customers, for the first time, to ship segregated crude oil streams south from Hardisty, Alberta to refining markets in Montana. In support of its investment, Inter Pipeline has received shipping commitments to transport 30,000 barrels per day ("b/d") of segregated crude oil from Hardisty under a 7-year take-or-pay contract.

New Oil Segregation Service

The Bow River Pipeline system gathers oil production in southern Alberta for delivery north to the oil storage and marketing hub at Hardisty, Alberta and south to interconnecting export pipelines near the Montana border. The existence of multiple mainline transmission pipelines and flexible pumping configurations allow oil to flow in both directions.

In 2008, the Bow River system delivered 26,000 b/d north to Hardisty and 89,500 b/d south to the Montana border. Southbound shipments consisted of 62,000 b/d of locally gathered Bow River crude oil and an additional 27,500 b/d of oil sourced from the Hardisty oil storage hub. Southbound deliveries on the Bow River system are currently shipped as a single, commingled blend of oils.

The Bow River expansion project announced today will allow crude oil grades sourced at the Hardisty storage hub to be shipped south as a distinct, segregated stream. This will give refining customers access to multiple grades of oil available at Hardisty without product commingling with the locally gathered Bow River oil stream.

Long Term Competitive Positioning

In recent years Inter Pipeline has completed several capacity expansion, line reversal and facility enhancement projects on the Bow River Pipeline system. These investments underscore the continuing strong organic development potential of the Bow River system as its flow patterns and capabilities are realigned with changing market conditions.

David Fesyk, Inter Pipeline's President and Chief Executive Officer, commented "The Bow River segregation project has been developed in direct response to customer demand for more flexible shipping options from the Hardisty market hub. At the same time, it will strengthen our competitive position as the primary supplier of Canadian crude oil to the Montana refining market."

Firm Shipping Commitments

Inter Pipeline has received strong shipper support for the Bow River oil segregation project. Through an open season tendering process, shippers have committed to transport 30,000 b/d of segregated oil under a 7-year take-or-pay agreement. This agreement will allow Inter Pipeline to generate stable revenue, regardless of volumes physically shipped south from Hardisty.

Revenue is expected to commence upon completion of construction and commissioning activities in the first quarter of 2010.

Attractive Investment Economics

The expansion of southbound delivery capabilities will involve the construction of 135 kilometers of new pipeline and related facility modifications at an estimated capital cost of approximately $72 million. This investment is expected to generate $16.5 million per year in incremental cash flow, or approximately $0.04 per unit annually.

Funding for the project will come from Inter Pipeline's existing committed credit facility. At year-end 2008, this facility had $325 million of credit capacity available with a renewal term that extends through 2012.

Inter Pipeline Fund

Inter Pipeline is a major petroleum transportation, bulk liquid storage and natural gas liquids extraction business based in Calgary, Alberta, Canada. Structured as a publicly traded limited partnership, Inter Pipeline owns and operates energy infrastructure assets in western Canada, the United Kingdom, Germany and Ireland. Additional information about Inter Pipeline can be found at www.interpipelinefund.com.

Inter Pipeline is a member of the S&P/TSX Composite Index. Class A Units trade on the Toronto Stock Exchange under the symbol IPL.UN.

Eligible Investors

Only persons who are residents of Canada, or if partnerships, are Canadian partnerships, in each case for purposes of the Income Tax Act (Canada) are entitled to purchase and own Class A Units of Inter Pipeline.

Disclaimer

Certain information set forth above may contain forward-looking statements that involve risks and uncertainties. Readers are cautioned not to place undue reliance on forward-looking statements. Such information, although considered reasonable by the General Partner of Inter Pipeline at the time of preparation, may later prove to be incorrect and actual results may differ materially from those anticipated in the statements made. For this purpose, any statements that are not statements of historical fact may be deemed to be forward-looking statements.

Forward-looking statements often contain terms such as "may", "will", "should", "anticipate", "expects" and similar expressions. Such risks and uncertainties include, but are not limited to, risks associated with operations, such as loss of markets, regulatory matters, environmental risks, industry competition and the ability to access sufficient capital from internal and external sources. You can find a discussion of those risks and uncertainties in Inter Pipeline's securities filings at www.sedar.com. Except to the extent required by applicable securities laws and regulations, Inter Pipeline assumes no obligation to update or revise forward-looking statements made herein or otherwise, whether as a result of new information, future events, or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary note.

All dollar values are expressed in Canadian dollars unless otherwise noted.

Non-GAAP Financial Measures

Certain financial measures referred to in this news release, namely "cash flow", are not measures recognized by GAAP. These non-GAAP financial measures do not have standardized meanings prescribed by GAAP and therefore may not be comparable to similar measures presented by other entities. Investors are cautioned that these non-GAAP financial measures should not be construed as alternatives to other measures of financial performance calculated in accordance with GAAP.

Contact Information