Inter Pipeline Ltd. announced the execution of binding commercial agreements supporting a $100 million expansion of its Mid-Saskatchewan Pipeline system. The agreements are expected to generate about $25 million to $30 million in incremental EBITDA annually. Five oil producers entered ship-or-pay contracts to support the project with terms ranging from four to 10 years. Inter Pipeline expects the expansion to enter service in late 2014, with full completion by second-quarter 2015.
The expansion will include construction of more than 30 miles of new mainline pipe, about 25 miles of new pipeline laterals and associated pumping and metering facilities. Once in service, the new pipelines will add about 95,000 barrels of oil per day of new capacity. When it enters service, Inter Pipeline expects the expansion to operate at less than 50% capacity, with utilization increasing over time with area production.
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