New Canadian PP resin unit might be up for sale

Canadian energy firm Inter Pipeline Ltd. might be looking to sell its Heartland Petrochemical Complex, including a polypropylene resin unit that's almost fully built.

Calgary-based IP is considering a sale of Heartland, in Fort Saskatchewan, Alberta, after investor Brookfield Infrastructure Partners LP on Feb. 22 made an unsolicited bid to buy the entire company.

On a Feb. 22 conference call, IP CEO Christian Bayle said that his firm "will be conducting a comprehensive review of strategic alternatives to maximize shareholder value." He added that IP "will evaluate a broad range of options, including exploring a possible corporate transaction and continuing to seek a partner for material interest" in Heartland.

Heartland's assets include PP resin and propylene feedstock units each with 1.1 billion pounds of annual capacity. Bayle said on the call that the PP unit will be mechanically complete late this year and commissioned in early 2022. IP "remains engaged in a process to secure a partner for a material interest in that project" but also "remains fully prepared to execute HPC on a standalone basis," he said.

Toronto-based Brookfield Infrastructure is IP's largest shareholder. Its offer values IP at C$16.50 (US$13.10) per share, or about C$7.1 billion (US$5.6 billion). Company officials said in a news release their offer is good through June 7.

At an industry conference in late 2018, IP Senior Vice President David Chappell said that Alberta was chosen for the Heartland project because of the area's access to numerous energy infrastructure assets, including oil sands, natural gas liquids, oil and liquid bulk storage. He added that Alberta has "low feedstock costs, existing infrastructure, competitive rail rates — and no hurricanes."

At the time, he said that IP would be investing just over $3 billion in the project. IP's plans grew from its acquisition in summer 2016 of a natural gas liquids business formerly owned by Williams Cos. of Tulsa, Okla.