Inter Pipeline to buy olefinic NGL business

Inter Pipeline Ltd., Calgary, has agreed to buy the olefinic offgas extraction and fractionation business in Canada of Williams and Williams Partners, Tulsa, for $1.35 billion (Can.) and proposes to expand into propane dehydrogenation (PDH).

The acquisition covers an extraction plant each at the bitumen upgraders of Suncor Energy Inc. and Canadian Natural Resources Ltd. near Fort McMurray, Alta. The plants, with combined capacities of 40,000 b/d, recover NGLs and olefins from coker offgas under long-term supply contracts.

Inter Pipeline also will acquire the 420-km, 43,000-b/d Boreal Pipeline, which carries recovered liquids to Williams’s 40,000-b/d olefinic fractionator at Redwater, north of Edmonton, operated by Pembina Pipeline Corp., Calgary.

Nova Chemicals Corp. buys as much as 17,000 b/d of ethane-ethylene mix produced at Redwater under a long-term fee-based agreement. US and Canadian energy marketers and refiners buy remaining NGLs and olefinic liquids under shorter-term, commodity-based agreements.

Inter Pipeline says the purchase price represents a 45% discount to the original cost of the assets.

It envisions the addition of a PDH plant, which it says would be Canada’s first, to convert about 22,000 b/d propane from Redwater and other sources into 525,000-tonnes/year of polymer grade propylene.

Inter Pipeline has invested $250 million so far in the PDH facility, which would be built near the Redwater fractionator. It estimates total capital expenditure of $1.85 billion.

Target service date is in 2020, depending on a final investment decision expected by yearend.

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