Inter Pipeline’s Heartland Petrochemical Complex Nearing Completion
The Heartland Petrochemical Complex (HPC) is in its final stages of completion in Strathcona County, Alberta, Inter Pipeline announced.
HPC is Inter Pipeline’s largest growth project and will be an industry-leading petrochemical facility converting locally sourced, low-cost propane into high-value polypropylene. Polypropylene is an easily transported and fully recyclable plastic used in the manufacturing of an extensive range of essential finished products and consumer goods such as healthcare products, medical supplies, textiles and lightweight automotive components.
Despite the prolonged impact of COVID-19, with Inter Pipeline’s adherence to health and safety procedures, HPC has exceeded 14 million work hours without a lost time incident on-site.
Since the April 22 HPC update, Inter Pipeline has negotiated an eighth take-or-pay agreement for HPC’s production capacity. The new contract is with an investment grade, multinational integrated energy producer.
Inter Pipeline has now secured 68% of HPC’s production capacity under long-term take-or-pay agreements, which is very near our stated objective to contract a minimum 70 percent of capacity in advance of the facility becoming operational.
Inter Pipeline is planning a staggered start-up of HPC with the commencement of polypropylene facility operations expected early in the second quarter of 2022. The propane dehydrogenation facility (PDH), which is substantially mechanically complete, is expected to be operational several months later, with definitive timing subject to the completion of final commissioning plans later this year. The estimated cost of the complex is expected to be approximately $4.3 billion subject to any final cost adjustments related to the potential capitalization of certain additional PDH commissioning expenses and interest during construction for the commissioning period.
HPC can produce polypropylene before the start-up of the PDH plant utilizing polymer grade propylene (PGP) feedstock production from Inter Pipeline’s adjacent Redwater Olefinic Fractionator (ROF). A 600,000 barrel PGP storage cavern at ROF and pipeline connectivity between ROF and HPC provide the necessary infrastructure to support a stable supply of feedstock and operational flexibility.
Inter Pipeline continues to expect that 2023 will be the first full year of HPC’s polypropylene production and reconfirms its previous guidance of annual adjusted EBITDA between $400 to $450 million for that year. However, as the definitive timing for commissioning of the full complex has not yet been finalized, the Company considers it prudent to withdraw its 2022 financial guidance for HPC. The long-term average annual adjusted EBITDA for HPC remains approximately $450 million to $500 million, based on the seven-year historical average North American posted polypropylene to Edmonton propane price spread of approximately $1,450 per ton.
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