Inter Pipeline Ltd. Bets On Canadian Recovery

Inter Pipeline Ltd. has announced plans to acquire the Canadian natural gas liquids (NGL) midstream businesses of Williams Companies Inc. and Williams Partners L.P. (Williams Canada). The US$1.03 billion transaction is expected to close in third-quarter 2016.

Inter Pipeline Ltd. is betting that a rebound in commodity prices will justify the expansion of its natural-gas liquids business as the deal adds to its existing NGL business and opens up a potential new line of business, as the company will assume a petrochemical complex proposal in Alberta.

The Williams Canada business is anchored by the two liquids extraction plants located near Fort McMurray, Alberta, Canada. These facilities process offgas, which is created when oil sands bitumen is heated to high temperatures though an upgrading process. This offgas byproduct is rich in high value NGL and olefins, the company said.

The first extraction plant, which began operations in 2002, processes offgas from the Suncor Energy Inc. (Suncor) oil sands upgraders. The second extraction facility, completed in early 2016, is integrated with the Canadian Natural Resources Limited (CNRL) Horizon upgrader. Suncor and CNRL are contractually obligated to deliver offgas feedstock to the extraction plants under multi-decade supply arrangements. On a combined basis, these facilities are capable of extracting approximately 17,000 b/d of ethane-ethylene mix and 23,000 b/d of other NGL and olefinic liquids.

The sale includes the liquids extraction plants located near Fort McMurray, as well as a fractionator near Redwater, Alberta, and a pipeline system that connects these facilities.

Since 2013, Williams Canada has been developing an opportunity to construct Canada’s first propane dehydrogenation facility. Substantial design work and equipment procurement has been initiated by Williams Canada. Site preparation and early civil construction has also commenced on lands neighboring the Redwater fractionator, the company said. As a result of this acquisition, Inter Pipeline also assumes responsibility for the potential construction of the propane dehydrogenation facility.