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Abstract
(CCNMatthews - March 5, 2007) - Inter Pipeline Fund (Inter Pipeline) (TSX:IPL.UN) announced today that it has entered into an agreement to acquire the Corridor Pipeline System (Corridor) from an affiliate of Kinder Morgan Inc. Corridor is the sole transporter of diluted bitumen and related products produced by the Athabasca Oil Sands Project (AOSP). Owned by Shell Canada Energy (Shell Canada), Chevron Canada Limited (Chevron) and Western Oil Sands L.P. (Western), AOSP is a major oil sands mining and bitumen upgrading operation based in Alberta. Corridor provides the transportation link between AOSP's Muskeg River bitumen mining operation near Fort McMurray, Alberta and its Scotford upgrading facility near Edmonton, Alberta.
As a result of the acquisition, Inter Pipeline will also assume responsibility for the completion of an estimated $1.8 billion expansion of Corridor. This project, which currently is under construction, will allow diluted bitumen capacity on the Corridor system to increase from its current capacity of 280,000 barrels per day to approximately 465,000 barrels per day. The expansion of the Corridor system has been requested by shippers to accommodate planned increases in AOSP production volume. Construction activity includes the installation of a new 42-inch diameter pipeline to transport diluted bitumen between AOSP's Muskeg River mine and the Scotford upgrader. Inter Pipeline expects that expansion capacity on the Corridor system will be in service in 2010. At closing, Inter Pipeline will assume approximately $300 million in additional debt associated with construction in progress.
In response to AOSP's growth plans, and at the request of the Shippers, Corridor has commenced construction of a new 42-inch diameter pipeline between the Muskeg River mine and the Scotford upgrader near Edmonton. The new 42-inch diameter pipeline will transport a blend of oil sands bitumen and diluent to the Scotford upgrader. Subsequent processing of diluted bitumen at the upgrader will allow the recovery of diluent from the blended stream. Recovered diluent, a very light petroleum product, will then be returned via Corridor's existing 24-inch diameter pipeline back to the Muskeg River mine where it will be reused.