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Plans announced to built propane and polypropylene complex in Strathcona County

Plans announced to built propane and polypropylene complex in Strathcona County

Inter Pipeline has announced plans to construct a world-scale integrated propane dehydrogenation (PDH) and polypropylene (PP) plant in Strathcona County, Alberta. The Heartland Petrochemical Complex will be built near Inter's Redwater Olefinic Fractionator, and is estimated to cost $3.5 billion.

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," commented Christian Bayle, Inter Pipeline's President and Chief Executive Officer. "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."

Investment Highlights
  • This $3.5 billion project represents the single largest capital investment in Inter Pipeline's history
  • Upon completion, the project is estimated to generate approximately $450 million to $500 million of long-term annual average EBITDA and be accretive to future funds from operations per share
  • Inter Pipeline has secured initial binding commercial support for the project from certain counterparties through take-or-pay arrangements
  • Facility design is well advanced with approximately $400 million invested to date in engineering, procurement and early civil works

The PDH facility will be designed to convert approximately 22,000 barrels per day of propane into 525,000 tonnes per year of polymer grade propylene. Propane feedstock for the PDH plant will be sourced from Inter Pipeline's Redwater Olefinic Fractionator as well as several other third party fractionators in the region.

Detailed engineering for the plant was awarded to Fluor Corporation in 2013 and is now approximately 85 percent complete. Inter Pipeline has also completed early civil work at the site in preparation for facility construction activities in early 2018.

The integrated PP plant will utilize propylene from the PDH plant to produce 525,000 tonnes of polypropylene per year. Linde Engineering was awarded the front end engineering design contract for this facility in 2017, and work is currently approximately 70 percent complete. Construction of this component of the complex is scheduled to begin in the second half of 2018.

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."

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