CALGARY, Alberta, May 26 - Inter Pipeline Fund (IPL_u.TO) said on Tuesday said it has agreed to ship ultra-light oil to Imperial Oil Ltd's (IMO.TO) newly approved Kearl oil sands project, spending C$135 million ($121 million) to connect the facility to its existing pipeline network.
Inter Pipeline said it will use an existing line that had been slated to be abandoned and add additional pipe to carry 60,000 barrels a day of diluent from Edmonton, Alberta, to the Kearl site north of Fort McMurray by late 2012.
The diluent is ultra-light oil that is blended into the tar-like bitumen produced in northern Alberta's oil sands, allowing the heavy crude to flow through pipelines.
Imperial approved the initial, C$8 billion phase of the Kearl project on Monday, the first new oil sands mine to go ahead since late last year, when plunging oil prices and scarce credit caused C$90 billion worth of projects to be canceled.
Inter Pipeline said Imperial had agreed to a firm 25-year contract, with an option to take additional pipeline space if need. The pipeline firm will use a 12-inch line now serving a rival project, but slated to be replaced with a larger conduit, to deliver the diluent.
It will spend much of the planned capital cost extending the line to the Kearl site and adding lines to diluent suppliers in the Edmonton region.
Inter Pipeline said the agreement will add distributable cash of 5 to 10 Canadian cents per unit annually for investors.
The trust's units fell 5 Canadian cents to C$8.41 on Tuesday afternoon on the Toronto Stock Exchange.
($1=$1.12 Canadian)
Inter Pipeline said it will use an existing line that had been slated to be abandoned and add additional pipe to carry 60,000 barrels a day of diluent from Edmonton, Alberta, to the Kearl site north of Fort McMurray by late 2012.
The diluent is ultra-light oil that is blended into the tar-like bitumen produced in northern Alberta's oil sands, allowing the heavy crude to flow through pipelines.
Imperial approved the initial, C$8 billion phase of the Kearl project on Monday, the first new oil sands mine to go ahead since late last year, when plunging oil prices and scarce credit caused C$90 billion worth of projects to be canceled.
Inter Pipeline said Imperial had agreed to a firm 25-year contract, with an option to take additional pipeline space if need. The pipeline firm will use a 12-inch line now serving a rival project, but slated to be replaced with a larger conduit, to deliver the diluent.
It will spend much of the planned capital cost extending the line to the Kearl site and adding lines to diluent suppliers in the Edmonton region.
Inter Pipeline said the agreement will add distributable cash of 5 to 10 Canadian cents per unit annually for investors.
The trust's units fell 5 Canadian cents to C$8.41 on Tuesday afternoon on the Toronto Stock Exchange.
($1=$1.12 Canadian)
