Inter Pipeline Fund announced a $2.1-billion plan to expand its pipeline system after inking a deal with a venture between Cenovus Energy and ConocoPhillips.
The operator of pipelines throughout Alberta signed a binding shipper support agreement to ship bitumen and diluent for three major oil sands projects owned by the FCCL Partnership.
The expansion plans in northern Alberta involve the construction of approximately 840 kilometres of new pipeline and seven new pump stations.
Inter Pipeline chief operating officer Christian Bayle said the expansion will strengthen its position as a major bitumen blend transporter and dominant diluent provider to the oil sands. "This development program has been driven by market demand and in particular, the transportation requirements from the planned FCCL projects," he said on a conference call.
However, he added, the development projects will build new capacity on certain segments of the pipeline that will "significantly exceed" FCCL's capacity requirements.
Under the shipper support agreement, FCCL has agreed to provide $225 million in funding for long leadtime materials, engineering costs, land procurement and regulatory activities.
The new line will provide service to existing FCCL projects at Foster Creek and Christina Lake, as well as the Narrows Lake project under development.