Inter Pipeline cuts 2014 spending by a third, project costs rise
CALGARY, Alberta Jan 29 (Reuters) - Inter Pipeline Ltd , which operates regional oil and gas pipelines in Western Canada, said on Wednesday it expects to cut spending this year by one-third even as the cost of expanding its oil sands network rise.
The company said it is budgeting C$1.31 billion ($1.17 billion)for capital projects in 2014, down from C$1.95 billion last year as its spends less on its largest program, the expansion of the Cold Lake and Polaris pipeline systems that will primarily serve oil sands projects jointly owned by Cenovus Energy Inc and ConocoPhillips.
However the company warned that while it will spend less on the expansion this year, costs for the projects are rising. It estimates it will spend a total C$2.9 billion on the lines, 12 percent above earlier estimates, because of higher labor expenses and changes to the scope of the projects.
The higher costs will be recouped from the shippers on the lines.
The projects include construction of 840 kilometers (522 miles) of new pipeline and seven oil pumping stations. Work began in 2013 and commercial operations are expected to begin by mid-year.
Inter Pipeline shares were down 6 Canadian cents to C$26.44 by midmorning on the Toronto Stock Exchange.