Inter Pipeline has reported strong financial and operating results for the three and six month periods ended June 30.
Funds from operations totalling $240 million, compared to $261.5 million in the second quarter of 2018. While pipeline operations generated stable results, the eight percent decrease in funds from operations was due to lower frac-spread pricing in the NGL processing business, it said.
Inter Pipeline’s conventional oil pipelines business segment generated funds from operations of $49.6 million, an increase of $1.4 million compared to the same period in 2018 as a result of higher midstream marketing activities and lower operating expenses.
At the beginning of August 2019, Inter Pipeline announced it has begun construction on 75 kilometers of new eight-inch diameter pipeline that will connect Inter Pipeline’s Throne Station on the Bow River pipeline system to the Central Alberta pipeline system in the Stettler area. The $100 million project is the second phase of a multi-phased approach to infrastructure development for Inter Pipeline’s conventional pipeline business in the region. When completed, Inter Pipeline forecasts throughput volume of 10,000 to 15,000 barrels per day (b/d) on the new pipeline, with approximately one third of forecast shipments currently secured for a 10-year term.
Meanwhile, its bulk liquid storage segment generated funds from operations of $26.9 million in the second quarter of 2019, compared to $17.4 million in the second quarter of 2018. These favourable results were aided by the recently acquired storage business in the United Kingdom and the Netherlands, which operated at a 96 percent utilization rate.
Overall, average storage utilization rates during the second quarter were 83 percent compared to 84 percent for the same period a year ago, and 78 percent in the first quarter of 2019. Customer interest continues to improve, particularly in our Danish operations, and as a result, July utilisation rates across all European terminals rose to 90 percent.
Inter Pipeline’s oil sands transportation business produced stable operating and financial results. Funds from operations in the second quarter of 2019 were $149.7 million, consistent with the second quarter of 2018.
NGL processing funds from operations were $72.1 million for the second quarter of 2019. This represents a decrease of $29.2 million from the second quarter of 2018 primarily due to lower frac-spreads. Paraffinic frac spreads within the offgas processing business were particularly impacted by low North American propane pricing and Alberta butane pricing.
In the second quarter of 2019, $287.1 million was invested in the Heartland Petrochemical Complex, with the total capital incurred on the project at approximately $1.6 billion.
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