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Inter Pipeline to build C$3.5B petrochemical plant in Alberta

Inter Pipeline Ltd. received approval from its board of directors to build a C$3.5 billion petrochemical plant in Alberta, its largest capital investment so far.

The Heartland petrochemical complex, to be constructed in Strathcona County near Inter Pipeline's Redwater Olefinic fractionator, would be capable of converting 22,000 barrels per day of propane from the Redwater fractionator and other third-party fractionators into 525,000 tonnes per year of a type of plastic called polypropylene. Inter Pipeline expects to begin construction by early 2018, according to a Dec. 18 news release.

The project received initial binding commercial commitments under about nine-year, take-or-pay contracts, secured during the first phase of Inter Pipeline's phase contracting process. Contracting for the second phase would begin early 2018, during which Inter Pipeline aims to obtain 70% to 85% of total petrochemical processing capacity under take-or-pay contracts over the next four years. The rest of the capacity would be used by Inter Pipeline for its own commercial purposes.

Upon scheduled completion in late 2021, the project is expected to generate about C$450 million to C$500 million in long-term annual average EBITDA. Inter Pipeline has invested about C$400 million in the Heartland plant to date.

Heartland would also include storage facilities and rail loading assets for distribution of produced polypropylene to markets in North America.

"Driven by attractive feedstock and utility costs, the Heartland Complex is expected to be one of the lowest cost polypropylene producers in North America," said Christian Bayle, president and CEO of Inter Pipeline.