Inter Pipeline Fund
TSX : IPL.UN

Inter Pipeline Fund

May 07, 2007 09:00 ET

Inter Pipeline Fund: Cold Lake Pipeline to Connect Shell Canada Energy's Orion Project

CALGARY, ALBERTA--(CCNMatthews - May 7, 2007) - Inter Pipeline Fund (Inter Pipeline) (TSX:IPL.UN) announced today that the Cold Lake Pipeline Limited Partnership will invest approximately $11 million to provide transportation service to the Shell Canada Energy (Shell Canada) Orion oil sands project in east central Alberta. New pipeline and related facilities will transport approximately 13,500 barrels per day (b/d) of blended bitumen from the first phase of the Shell Canada Orion project. Under a long term shipping agreement, Shell Canada has the option to transport up to 30,000 b/d of blended bitumen through the phased expansion of the Orion project.

"We are pleased to introduce Shell Canada as a new shipper on the Cold Lake Pipeline system", commented David Fesyk, President and Chief Executive Officer of Inter Pipeline Fund. "Shell Canada is a high quality, senior producer and we look forward to meeting their long term transportation needs".

Inter Pipeline owns an 85% operating interest in the Cold Lake Pipeline Limited Partnership. Transporting approximately 325,000 b/d, the Cold Lake Pipeline system is the largest oil gathering pipeline in the prolific Cold Lake oil sands region. Current shippers on the Cold Lake Pipeline system are Imperial Oil, Canadian Natural Resources and EnCana.

New Facility Construction

A new pipeline lateral consisting of two 5-kilometre pipelines and associated pump and measurement facilities will be constructed between the Orion project and the Cold Lake Pipeline system near the town of Bonnyville in east central Alberta. A 6" diameter pipeline will provide diluent service and a 12" diameter pipeline will provide bitumen blend service. Construction is expected to be completed by the third quarter of 2007.

Inter Pipeline's share of the estimated $11 million capital cost will be proportionate to its 85% ownership interest in the Cold Lake Pipeline Limited Partnership. Funding will be provided through Inter Pipeline's existing credit facilities.

Contract-Based Cash Flow

Inter Pipeline and Shell Canada have entered into a 10 year transportation service agreement, with each party holding an option to renew for an additional 5 year term. The ship-or-pay nature of the contract will allow Inter Pipeline to generate stable and predictable cash flow. The contract also includes provisions for the flow through of all material operating costs.

Inter Pipeline expects to initially generate minimum annual EBITDA of approximately $1.8 million. Beginning in mid 2011, minimum annual EBITDA will increase to approximately $3.0 million due to an increase in the ship-or-pay volume threshold applicable to production shipped from the Orion project. Pipeline throughputs above minimum ship-or-pay levels will generate incremental cash flow for the Cold Lake Pipeline Limited Partnership.

The project is expected to be accretive to Inter Pipeline's unitholders, providing approximately $0.01 per unit annually in additional cash available for distribution.

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 and debentures 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.

Non-GAPP Financial Measures

Certain financial measures referred to in this news release, namely "cash available for distribution" and "EBITDA" 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.

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

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