News Release



Inter Pipeline Fund Announces 2010 Capital Expenditure Program


Dec 14, 2009 - 11:56 ET

CALGARY, ALBERTA--(Marketwire - Dec. 14, 2009) - Inter Pipeline Fund ("Inter Pipeline") (TSX:IPL.UN) announced today its planned capital expenditure program for 2010. In the coming year, Inter Pipeline plans to invest approximately $268 million in organic growth projects and $24 million in sustaining capital projects. Approximately 90% of 2010 growth capital will be directed toward Inter Pipeline's oil sands transportation business segment, including final commissioning costs for the recently-constructed capacity expansion of the Corridor pipeline system.

Inter Pipeline also confirmed today the declaration of a cash distribution of $0.075 per unit for December 2009. This represents Inter Pipeline's initial payment under its new monthly distribution rate, as announced on October 21, 2009. Previously, Inter Pipeline paid monthly distributions at a rate of $0.07 per unit. The December distribution will be paid on or about January 15, 2010 to unitholders of record on December 22, 2009. Inter Pipeline expects to maintain its new level of distributions through 2011 and beyond, despite becoming a taxable entity under SIFT legislation.

Inter Pipeline's long term outlook for the business remains very positive. Industry fundamentals within each business segment are strong, and major organic growth projects are being advanced according to plan. The latter includes approximately $2 billion in capital growth projects, including a major capacity expansion project on the Corridor pipeline system, a diluent transportation project for the Kearl oil sands development and a segregated oil delivery project on the Bow River pipeline system. Collectively, these projects are forecast to increase Inter Pipeline's EBITDA by approximately $200 million per year once in service. This represents an increase of approximately 60% above Inter Pipeline's EBITDA generated in 2008.

  

----------------------------------------------------------------------------
Capital Expenditure Summary (millions) 2010 Forecast 2009 Forecast
-------------------------------
Growth Capital
Oil Sands Transportation(i) $243 $482
Bulk Liquid Storage 12 34
NGL Extraction(i) 8 11
Conventional Oil Pipelines 5 52
------ ------
Total Growth Capital 268 579
Sustaining Capital 24 20
------ ------
Total Capital $292 $599
------ ------
------ ------

(i) Represents Inter Pipeline's proportional ownership interest in the Cold
Lake pipeline system and the Empress V NGL extraction facility

Oil Sands Transportation

In 2010, growth capital expenditures will again focus on pipeline expansion projects within the oil sands transportation business segment. A total of $243 million in growth capital has been budgeted for expansion projects currently in progress on the Corridor and Cold Lake oil sands systems.

Inter Pipeline is in the late stages in the development of a major $1.8 billion capacity expansion project on the Corridor pipeline system that will increase bitumen blend capacity from 300,000 barrels per day (b/d) to approximately 465,000 b/d. Capital expenditures in 2010 are estimated at $213 million to complete facility construction, line fill and related commissioning costs. The Corridor expansion project is expected to enter service in late 2010, with incremental revenue commencing no later than January 1, 2011.

During 2010, Inter Pipeline will begin construction of a new $135 million diluent transportation system to deliver condensate to the Kearl oil sands project owned by ExxonMobil and Imperial Oil. Approximately $28 million will be spent in 2010 on new pipeline and diluent pumping facilities. Upon completion in 2012, this project will meet the initial 60,000 b/d diluent requirement of the Kearl oil sands project. Inter Pipeline anticipates future volume growth on the diluent delivery system from the phased expansion of the Kearl project and third party opportunities.

Remaining growth capital expenditures in 2010 will be directed toward facility enhancements and station upgrades on the Cold Lake pipeline system.

Bulk Liquid Storage

In the bulk liquid storage business segment, Inter Pipeline expects to spend approximately $12 million on growth capital projects in 2010. Planned expenditures primarily involve tank conversion and refurbishment projects at the Immingham terminal on the east coast of the United Kingdom. These investments will enhance product handling capabilities and allow the storage of new molten sulphur and petroleum products at Immingham.

Relatively small amounts of growth capital have been allocated to Inter Pipeline's other storage terminals in the United Kingdom, Germany and Ireland.

NGL Extraction

Growth capital expenditures within the NGL extraction business segment are forecast at $8 million for 2010. The majority of this amount will be directed toward a new capital project at the Cochrane NGL extraction plant to reduce sulphur levels in the propane-plus product stream. Improving product quality is expected to ensure continuing access to premium-priced markets for Inter Pipeline's propane-plus sales at Cochrane. An estimated total of $50 million is forecast to be spent on the Cochrane desulphurization project over the next 3 years, roughly 50% of which will be treated as sustaining capital.

Remaining growth capital expenditures are related to small-scale efficiency improvement projects at the Cochrane and Empress II extraction plants.

Conventional Oil Pipelines

In the conventional oil pipeline segment, Inter Pipeline expects to incur a total of approximately $5 million in growth capital expenditures in 2010. Final construction and commissioning activities related to an oil segregation project on the Bow River system will account for roughly $3 million of planned expenditures. This project, which will be in-service in early 2010, will allow the shipment of 30,000 b/d of segregated oil products from the Hardisty oil storage hub in Alberta to the Montana border.

Other growth capital initiatives, totaling approximately $2 million will be spent on various facility upgrades and new connection projects to attract incremental oil volumes to Inter Pipeline's conventional gathering systems.

Sustaining Capital

Inter Pipeline expects to incur sustaining capital costs of roughly $24 million in 2010. Approximately $9 million will be allocated to the NGL extraction business segment. This amount includes various operational reliability upgrades and the sustaining capital component of expenditures related to the Cochrane desulphurization project.

An additional $7 million has been budgeted to meet sustaining capital requirements within the European bulk liquid storage business segment. Initiatives in 2010 relate to on-going safety, security and maintenance requirements and terminal upgrade projects that have been mandated through government regulation in the United Kingdom.

Remaining capital expenditures total $8 million, including $5 million for corporate initiatives such as computer system upgrades and a corporate office expansion project.

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 increased level of cash distributions to unitholders through 2011 and beyond, statements regarding the potential cash flow contributions from the Kearl Diluent project and the Bow River segregation project, and timing and completion of its Corridor, Bow River and Kearl projects. 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.

Non-GAAP Financial Measures

Certain financial measures referred to in this news release are not measures recognized by GAAP. These non-GAAP financial measures do not have standardized meanings prescribed by GAAP and therefore may not be comparable to similar measures presented by other entities. Investors are cautioned that these non-GAAP financial measures should not be construed as alternatives to other measures of financial performance calculated in accordance with GAAP.



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