News Release



Inter Pipeline Fund Announces December 2008 Cash Distribution and Confirms Cash Flow Stability


Dec 10, 2008 - 09:30 ET

CALGARY, ALBERTA--(Marketwire - Dec. 10, 2008) - Inter Pipeline Fund ("Inter Pipeline", the "Partnership") (TSX:IPL.UN) announced today the declaration of a cash distribution of $0.07 per unit for December 2008. This distribution will be paid on or about January 15, 2009 to unitholders of record on December 31, 2008. Inter Pipeline's current monthly cash distribution rate is subject to periodic review by the Board of Directors. Inter Pipeline expects to maintain its current level of cash distributions through 2011 and beyond, despite becoming taxable in 2011.

In light of unprecedented and continuing volatility in global capital markets, Inter Pipeline would like to provide additional commentary on the fundamental strengths and positioning of the Partnership.

Strong Contract Based Cash Flow

Inter Pipeline has a well-diversified asset base which generates long-term and predictable cash flow, thereby providing unitholders with a stable source of monthly cash distributions. The majority of Inter Pipeline's cash flow is derived from transportation and processing agreements that are either fee-based or involve long-term cost of service contracts.

Inter Pipeline's Corridor and Cold Lake pipeline systems, which together comprise its oil sands transportation business segment, are contracted under two separate cost of service contracts that are not subject to changing commodity prices or the amount of volume transported. The Corridor and Cold Lake systems provide transportation service to major oil sands developments that are in production today. Inter Pipeline's long-term transportation service contracts are with high credit quality senior producers and integrated energy companies including Shell, Chevron, Marathon, Imperial Oil, EnCana and Canadian Natural Resources.

Low Commodity Price Exposure

The vast majority of Inter Pipeline's cash flow is not dependant on pricing relationships within energy commodity markets. Commodity price exposure is limited to the pricing of a single natural gas liquid ("NGL") product, propane-plus, at the Cochrane NGL extraction facility. Inter Pipeline realizes a market price for propane-plus products extracted at the Cochrane facility, and incurs the cost of natural gas purchased to replace the volume of extracted NGL's. This commodity price relationship is commonly referred to as the "frac-spread".

While frac-spreads have deteriorated significantly in recent months with the dramatic fall in crude oil prices, the impact on Inter Pipeline's cash flow has been significantly mitigated through hedging contracts. For the current quarter ending December 31, 2008, Inter Pipeline has hedged 27% of forecast propane-plus volumes at an average price of 43 CDN cents per US gallon. For 2009, Inter Pipeline has hedged 32% of forecast propane-plus volumes at an average price of 83 CDN cents per US gallon, and for 2010 11% of forecast volumes have been hedged at 81 CDN cents per US gallon. Based on a 15-year average frac-spread of 27.5 US cents per US gallon, Inter Pipeline's contribution from frac-spread represents only approximately 10% of its consolidated earnings before interest, taxes, depreciation and amortization.

Strong Credit Profile

As at September 30, 2008, Inter Pipeline had a conservative recourse debt to capitalization ratio of 42.6% and over $1.3 billion of credit capacity available on its fully committed credit facilities. The remaining tenure on these committed facilities is approximately 4 years. Inter Pipeline's banking syndicate is well diversified with commitments from 16 major Canadian and international lending institutions. In addition, Inter Pipeline maintains an investment grade corporate credit rating.

Given this strong credit profile, Inter Pipeline believes it is well-positioned to continue routine operations and grow organically during this period of global uncertainty.

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, and Inter Pipeline's belief that it is in a strong position to operate and grow organically during this period of global uncertainty. 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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