The CA$250 million capex program for 2016 will support conventional oil gathering and oil sands transportation businesses, Inter Pipeline Ltd. said Dec. 21. Organic growth projects will likely account for about CA$190 million of total capex.

The 2016 capital program is lower compared to recent years’ expenditure levels, because construction on major elements of an integrated $3.2 billion expansion on its Cold Lake and Polaris pipeline systems is now finished, Inter Pipeline said. The expansion projects have increased mainline capacity.

Inter Pipeline's conventional oil gathering business continues to expand due to increased production volumes in areas served by its pipeline systems. In 2016, Inter Pipeline plans to invest CA$90 million to construct new oil battery connections and expand storage capacity on its Bow River, central Alberta and mid-Saskatchewan pipeline systems.

This includes CA$45 million to complete the CA$65 million storage tank expansion at Kerrobert, Saskatchewan. This project on the mid-Saskatchewan pipeline system involves constructing 400,000 barrels of new storage capacity. It will be ready for service in the latter half of 2016.

About CA$55 million will support Inter Pipeline's oil sands transportation business in 2016. Capital projects on the Cold Lake, Corridor and Polaris pipeline systems will support the construction of new diluent receipt and bitumen blend delivery connections. This includes diluent connection to the JACOS Hangingstone oil sands project.

The CA$290 design work to provide transportation capacity to the FCCL Narrows Lake oil sands project was deferred; no material capital will be spent at this time, Inter Pipeline said.

Regarding bulk liquid storage, there is strong customer demand for storage services at Inter Pipeline’s European terminals. The company plans to invest CA$40 million on expansions and other growth projects across this business segment in 2016. About $30 million will construct new storage tanks and facilities in the U.K. and Germany, including completing the terminal expansion near Mannheim. The remaining $10 million will support projects at terminals in Sweden and Denmark.

Sustaining capex in 2016 will total CA$60 million; about CA$26 million will support corporate requirements including the consolidation of office space to a new Calgary, Alberta corporate headquarters. This will be completed in the spring.

Of the remaining CA$34 million, CA$18 million will be spent in the European bulk liquid storage business. The Canadian NGL extraction and pipeline operations will invest the remaining CA$16 million on several smaller projects.

Inter Pipeline Ltd. is based in Calgary.