Inter Pipeline Fund (IPL-U), a Calgary- based oil-sands pipeline company, increased the cost of an Alberta system expansion 18 percent and said it has enough customer support to move forward with the C$2.6 billion ($2.6 billion) project.
FCCL Partnership, a venture between Cenovus Energy Inc. (CVE) and ConocoPhillips (COP), agreed to become a customer of the project, which includes 840 kilometers (520 miles) new pipelines, the company said in a statement today. Inter Pipeline will provide FCCL with 500,000 barrels a day of bitumen blend capacity and 350,000 barrels of capacity for diluent, a material that helps the oil-sands product flow by pipeline.
The project, which the company estimated would cost C$2.2 billion in January, will link to existing oil-sands projects at Foster Creek and Christina Lake as well as Narrows Lake, which is currently being developed. The new infrastructure will be operational for the first two areas in mid 2014 and facilities for Narrows Lake will be available in mid 2017, Inter Pipeline said.
Production from Canada’s oil sands is expected to more than double by 2021 to 3.38 million barrels a day, according to the Canadian Association of Petroleum Producers. Demand for diluent and other condensates will probably more than double to 700,000 barrels a day by the end of the decade from 310,000 last year, according to a forecast from ITG Investment Research on Monday.
Inter Pipeline fell 4 cents to C$23.57 at the close in Toronto.
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