Canadian Manufacturing

Inter Pipeline Fund signs deal to sell ethane to Nova Chemicals

by The Canadian Press   

Canadian Manufacturing
Operations Energy Oil & Gas ethane gas Inter Pipeline Fund

New agreement to buy gas extracted at Alberta plant runs until 2024

CALGARY—Inter Pipeline Fund said Monday it has signed a long-term deal with Nova Chemicals Corp. for ethane production from its Cochrane, Alta., extraction plant.

Nova, which currently buys a significant portion of the ethane under an agreement due to expire at the end of next year, has signed a new deal that will run until the end of 2024.

The two companies have also agreed to amend certain terms of the existing contract.

Inter Pipeline said the Cochrane extraction plant produced approximately 52,000 barrels per day last year making it the largest ethane production facility in Canada.


Under the terms of the new agreement, Inter Pipeline will receive a combination of fixed and variable payments.

The fund estimated that, based on conservative gas flow forecasts, the new sales agreement is expected to double the earnings before interest, taxes, depreciation and amortization to about $40 million per year starting in 2015.

The amended deal will also increase EBITDA from ethane sales to Nova by $10 million in 2103 and 2014.

Inter Pipeline owns and operates pipelines and other energy infrastructure assets in Western Canada, the United Kingdom, Denmark, Germany and Ireland

Copyright © The Canadian Press


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