Inter Pipeline has delayed its final decision on whether to build a propane dehydrogenation and polypropylene complex in Alberta by several months to allow time to negotiate sufficient long-term, take-or-pay contracts with customers, CEO Christian Bayle said on Friday.
The final investment decision has been pushed to the second half of this year from mid-2017, Bayle said. Similarly, the target startup date moved to the second half of 2021 from the middle of that year.
"It's our view that it will take a few more months to get this completed," he said of the $3.1 billion project during the company's quarterly earnings call. "If you don't get the right quality contracts in place, we're quite comfortable putting an end to the project, but we don't believe that is the base case at all."
Nearly a year ago, Inter Pipeline acquired Williams Partners LP's Canadian natural gas liquids businesses for $1.35 billion, including substantial design plans and equipment for a $1.85 billion, 22,000 b/d PDH plant that would produce 525,000 mt/year of polymer-grade propylene. Williams had invested about $250 million in the project, with site preparation near a fractionator close to Edmonton.
Inter Pipeline broadened the project to include a polypropylene plant as well, and has spent $305 million so far on engineering and preliminary construction.
Bayle said the investment illustrates the company's commitment to the project, though "we always reserve the option to retool or stop, if that's the right economic decision to make."
CFO Brent Heagy said the company does not have to get commitments for all output to sanction the project. Once Inter Pipeline receives a certain level of customer commitments, the company can make its FID and seek contracts for its internal maximum target later.
