News Release



Inter Pipeline Fund Announces 2009 Capital Expenditure Program and January 2009 Cash Distribution


Jan 12, 2009 - 09:30 ET

CALGARY, ALBERTA--(Marketwire - Jan. 12, 2009) - Inter Pipeline Fund (Inter Pipeline) (TSX:IPL.UN) announced today its planned capital expenditure program for this year. In 2009, Inter Pipeline plans to invest approximately $184 million in organic growth projects and about $25 million in sustaining capital projects. The majority of growth capital will be directed toward Inter Pipeline's oil sands transportation business segment, which includes continued construction of a capacity expansion project on the Corridor pipeline system. Capital expenditures will be financed from our existing committed credit facilities.

Inter Pipeline also announced today the declaration of a cash distribution of $0.07 per unit for January 2009. This distribution will be paid on or about February 16, 2009 to unitholders of record on January 30, 2009. Inter Pipeline expects to maintain its current level of cash distributions through 2010 and beyond, despite becoming taxable in 2011. This positive outlook is underpinned by attractive business fundamentals within each of Inter Pipeline's four business segments and a large inventory of future capital investment opportunities, including the completion of the $1.8 billion Corridor expansion project.

Amounts for 2008 below reflect most recent estimates of capital expenditures for the year.

  

Capital Expenditure Summary

CAD $million 2009 2008
-------------------------
Growth Capital(i)
Oil Sands Transportation $127 $562
Bulk Liquid Storage 36 35
NGL Extraction 20 13
Conventional Oil Pipelines 1 3
-------------------------
Total Growth Capital 184 613
Sustaining Capital 25 15
-------------------------
Total Capital $209 $628
-------------------------
-------------------------

(i) Represents Inter Pipeline's ownership interest in each business segment.

Oil Sands Transportation

In 2009, growth capital projects in the oil sands transportation business segment will utilize approximately $127 million of the total capital budget. Of this amount, approximately $105 million will be for the Corridor pipeline system and $22 million will be spent on the Cold Lake pipeline system.

The total forecast cost of the Corridor expansion project remains unchanged from its original budget at approximately $1.8 billion. Upon completion, bitumen blend capacity on the Corridor system is expected to increase from 300,000 barrels per day (b/d) to approximately 465,000 b/d. During 2008 the project progressed as planned, with all mainline pipe installed and much of the facility and interconnection work completed. At this stage, any pipeline and facility costs susceptible to major cost overruns have now either been expended or committed. As a result, Inter Pipeline's capital cost overrun risk on the project has largely been mitigated. In 2009, approximately $57 million will be spent finalizing facility work and clean up. The Corridor project continues to progress on schedule, and is expected to be in service in 2010.

With the completion of the Corridor expansion project, Corridor's existing 12-inch diluent line will become available for Inter Pipeline's alternative service. In follow up to an open season held in late 2007, approximately $4 million will be spent in 2009 on engineering studies. With the appropriate facility modifications, the 12-inch pipeline has potential to transport multiple commodity types and can be configured to flow either north or south.

On the Cold Lake pipeline system, quarter-point pump station upgrades are being completed and will be available for service in 2009. Minor capital will be spent on this project in 2009 to finalize these upgrades. With the addition of the new pump stations, bitumen blend capacity on the Cold Lake pipeline system is expected to increase from 460,000 b/d today to approximately 560,000 b/d.

A number of additional capacity expansion projects are also scheduled for the Cold Lake pipeline system in 2009 to accommodate increased oil sands production. Inter Pipeline expects to invest roughly $22 million on these additional facility and pipeline expansions.

Bulk Liquid Storage

Total capital expenditures for organic growth projects in bulk liquid storage are expected to be approximately $36 million in 2009. Two major projects comprise the majority of capital required in the coming year. In 2008, Inter Pipeline began construction of an additional 318,000 barrels of tankage at the Immingham West terminal, located on the eastern coast of the United Kingdom, to meet escalating demand for storage capacity. This project will be completed in 2009. An additional project in 2009 will see 79,000 barrels of storage capacity being converted to store molten sulphur for Total UK Limited under a long term contract.

Sustaining capital of $8 million is forecast to be spent in the bulk liquid storage segment in 2009 as tankage facilities are upgraded to comply with new UK safety regulations.

NGL Extraction

Capital plans for Inter Pipeline's natural gas liquids extraction business segment total approximately $28 million for 2009, with $20 million to be spent on growth capital and $8 million on sustaining capital. The previously announced Empress V deep cut initiative is expected to be completed early in the second quarter of 2009. This project is anticipated to increase ethane production by approximately 7,000 b/d. The remaining capital will be directed toward improving operational efficiencies and enhancing NGL quality and recovery at the Cochrane and Empress facilities.

Sustaining capital initiatives for 2009 will center on upgrades required because of gradual changes in the characteristics of the TransCanada gas stream.

Inter Pipeline Fund

Inter Pipeline is a major petroleum transportation, bulk liquid storage and natural gas liquids extraction business based in Calgary, Alberta, Canada. Structured as a publicly traded limited partnership, Inter Pipeline owns and operates energy infrastructure assets in western Canada, the United Kingdom, Germany and Ireland. Additional information about Inter Pipeline can be found at www.interpipelinefund.com.

Inter Pipeline is a member of the S&P/TSX Composite Index. Class A Units trade on the Toronto Stock Exchange under the symbol IPL.UN.

Eligible Investors

Only persons who are residents of Canada, or if partnerships, are Canadian partnerships, in each case for purposes of the Income Tax Act (Canada) are entitled to purchase and own Class A Units of Inter Pipeline.

Disclaimer

Certain information contained herein may constitute forward-looking statements that involve risks and uncertainties. Forward-looking statements in this news release include, but are not limited to, statements regarding Inter Pipeline's belief that it is well positioned to maintain its current level of cash distributions to unitholders through 2011 and beyond. Readers are cautioned not to place undue reliance on forward-looking statements. Such information, although considered reasonable by the General Partner of Inter Pipeline at the time of preparation, may later prove to be incorrect and actual results may differ materially from those anticipated in the statements made. For this purpose, any statements that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements often contain terms such as "may", "will", "should", "anticipate", "expects" and similar expressions. Such risks and uncertainties include, but are not limited to, risks associated with operations, such as loss of markets, regulatory matters, environmental risks, industry competition, potential delays and cost overruns of construction projects, including the Corridor pipeline system expansion project, and the ability to access sufficient capital from internal and external sources. You can find a discussion of those risks and uncertainties in Inter Pipeline's securities filings at www.sedar.com. The forward-looking statements contained in this news release are made as of the date of this document, and, except to the extent required by applicable securities laws and regulations, Inter Pipeline assumes no obligation to update or revise forward-looking statements made herein or otherwise, whether as a result of new information, future events, or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary note.

All dollar values are expressed in Canadian dollars unless otherwise noted.



Inter Pipeline Fund
Investor Relations:
Jeremy Roberge
Vice President, Capital Markets
(403) 290-6015
or
Toll Free: 1-866-716-7473
Email: jroberge@interpipelinefund.com
or
Inter Pipeline Fund
Media Relations:
Tony Mate
Director, Corporate and Investor Communications
(403) 290-6166
Email: Tony.Mate@interpipelinefund.com
Website: www.interpipelinefund.com
Inter Pipeline Fund

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