Fengate buys gas-powered cogeneration facility from Inter Pipeline

Fengate Real Asset Investments has acquired the Heartland Petrochemical Complex’s central utility block (CUB) from Inter Pipeline Ltd (TSX: IPL), a Calgary-based energy infrastructure company.

Terms weren’t disclosed.

The deal will see Inter Pipeline recover its development capital and Fengate assume responsibility for funding CUB construction. Capital costs are estimated at $600 million.

CUB is a 102 megawatt natural gas-powered cogeneration facility capable of supplying Inter Pipeline with utilities for Heartland, a propane dehydrogenation and polypropylene plant. It is expected to be in service by mid-2021.

Inter Pipeline will oversee CUB construction and operation.

Fengate is a Toronto-based investor in infrastructure, private equity and real estate.


Fengate Acquires Heartland Petrochemical Complex’s Central Utility Block from Inter Pipeline

Toronto, Ontario, Sept. 25, 2018 (GLOBE NEWSWIRE) — Fengate is pleased to announce that, on behalf of our investors, it has acquired the Heartland Petrochemical Complex’s Central Utility Block (“CUB”) from Inter Pipeline Ltd. (“Inter Pipeline”) (TSX:IPL).

Under the terms of the sale, Inter Pipeline will recover all of its development capital and Fengate will assume full responsibility for funding construction of the CUB, representing capital costs currently estimated at $600 million. Fengate has also entered into long-term agreements to supply electricity and other utilities to Inter Pipeline’s Heartland Petrochemical Complex in exchange for structured capital and operating recovery fee payments from Inter Pipeline.

“We are impressed with the quality of Inter Pipeline’s track record, strategy, operations and people, and this significant acquisition is an excellent fit with our power and energy infrastructure strategy,” said Andrew Cogan, Managing Director, Infrastructure Investments, Fengate. “This investment partners Fengate alongside a leader in the energy infrastructure sector and will provide stable, long-term returns for our investors.”

“We are very pleased with the results of this competitive sales process,” remarked Christian Bayle, Inter Pipeline’s President and Chief Executive Officer. “By partnering with a quality firm like Fengate for the development of the CUB, Inter Pipeline has meaningfully reduced its overall capital cost obligation for the Heartland Complex.”

Transaction Overview

The CUB is a 102 MW natural gas powered cogeneration facility capable of supplying Inter Pipeline with electricity, steam and other key utilities for its 100% owned Heartland Complex near Edmonton, Alberta. The $3.5 billion complex, which excludes the CUB capital cost, consists of integrated propane dehydrogenation and polypropylene plants. The complex will convert locally sourced, low-cost propane into 525,000 tonnes per year of polypropylene pellets. Construction of the Heartland Complex is in progress with completion scheduled for late 2021.

Fengate has engaged Inter Pipeline to manage the construction of the CUB and the day-to-day operations of the facility once in service. This partnership is in place to help ensure that the CUB, which will be highly integrated with the Heartland Complex, will be managed safely and efficiently for the long-term benefit of both Fengate and Inter Pipeline.

The CUB is expected to be in service by mid-2021 in order to provide utilities for the commissioning of the Heartland Complex. Fengate will be responsible for funding the capital costs for the CUB on an ongoing basis. When in service, the capital fee paid to Fengate will be adjusted upward or downward based on final construction costs.

Davies Ward Phillips & Vineberg LLP acted as legal advisor to Fengate on this transaction.

About Fengate
Fengate is a leading investment firm specializing in real assets, with a focus on infrastructure, private equity and real estate. With offices in Toronto, Oakville, Vancouver, Houston and New York, Fengate has a proven track record of successful projects and results-driven partnerships, establishing the firm as one of the most active real asset investors and developers in North America. Learn more at www.fengate.com.

About Inter Pipeline Ltd.
Inter Pipeline is a major petroleum transportation, natural gas liquids processing, and bulk liquid storage business based in Calgary, Alberta, Canada. Inter Pipeline owns and operates energy infrastructure assets in western Canada and Europe. Inter Pipeline is a member of the S&P/TSX 60 Index and its common shares trade on the Toronto Stock Exchange under the symbol IPL. www.interpipeline.com

Amy Holmes
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