Inter Pipeline Ltd. reduced its capital expenditure program, with the main focus of 2020 spending on investments within the company's NGL processing business segment.
The company cut its 2020 capital budget to C$1.2 billion, from C$1.46 billion in 2019, according to a Dec. 5 news release. Inter Pipeline said it plans to spend C$1.1 billion on organic growth initiatives while allocating the remaining amount for sustaining capital projects.
Inter Pipeline expects to invest approximately C$935 million in its Heartland petrochemical complex. The budget will cover the mechanical construction of the complex's polypropylene plant and the final construction stages of its propane dehydrogenation facility. The company said it will also spend C$45 million on other NGL processing projects, including ongoing work on a new storage cavern at its Redwater olefinic fractionator and debottlenecking activities at its Pioneer II offgas extraction facility.
Inter Pipeline plans to allocate C$75 million for its pipeline transportation systems, including an expansion of its Central Alberta oil pipeline system. Roughly C$35 million of the budget will go to the completion of the expansion's first two phases, slated to occur by the spring of 2020. The project includes the construction of two 130,000-barrel storage tanks and completion of the Viking connector project, a 75-kilometer pipe connecting Inter Pipeline's Throne station on the Bow River pipeline system to the Central Alberta system.
The expansion is expected to add an additional throughput volume of 10,000 barrels per day to 15,000 bbl/d to the Central Alberta system.
C$30 million of the C$75 million budget will be invested in upgrades at Inter Pipeline's oil sands transportation business, while C$10 million will be for smaller projects across the company's pipeline systems.
The company will also invest about C$40 million to enhance storage capacity at some of its European facilities. Inter Pipeline will provide a budget of approximately C$80 million for equipment and infrastructure replacements, liquid storage asset upgrades and other pipeline transportation projects.
Inter Pipeline plans to fund its 2020 capital expenditure program through cash flow from operations, available capacity under its C$1.5 billion revolving credit facility, debt issuances and proceeds from dividend reinvestment programs.