Inter Pipeline Fund Announces Transportation Agreement for Canadian Natural Resources Kirby South Oil Sands Project

Inter Pipeline Fund ("Inter Pipeline") (TSX:IPL.UN) announced today that it has
entered into a long term agreement with Canadian Natural Resources ("CNR") to
transport diluent and bitumen blend for the Kirby South oil sands project.
Approximately $95 million in pipeline and associated facilities have been
constructed to connect the Kirby South production site to the Cold Lake pipeline
system. 


Under the terms of the agreement, CNR has contracted for approximately 63,000
barrels per day (b/d) of bitumen blend and 18,000 b/d of diluent transportation
capacity for the Kirby South project beginning in August 2013. Inter Pipeline's
investment is supported by a long term contract which does not involve exposure
to throughput volumes or commodity price fluctuations.


"We are very pleased to be the transportation service provider for the Kirby
South oil sands project," commented David Fesyk, President and CEO of Inter
Pipeline. "This is a highly accretive investment which complements our current
expansion activities in the Cold Lake region. Our long term, integrated
expansion plans are unfolding as we anticipated."


In late March, Inter Pipeline announced that it had executed definitive
transportation agreements for a major $2.6 billion capacity expansion program on
its Cold Lake and Polaris systems in support of three oil sands projects owned
by the FCCL Partnership ("FCCL"), a business venture between Cenovus and
ConocoPhillips.


Project Description

Kirby South is a new large scale in-situ oil extraction project which will
utilize steam assisted gravity drainage technology to recover subsurface
bitumen. The Kirby South production site is located approximately 10 kilometres
("km") south of Conklin, Alberta and is in close proximity to new pipeline
infrastructure being constructed under Inter Pipeline's previously announced
$2.6 billion integrated oil sands development program. Inter Pipeline expects to
capture certain cost synergies through the coordination of construction
activities. In addition, production from the Kirby South project will be shipped
on certain common segments of pipeline where surplus capacity will be available,
making this a very capital-efficient investment. 


Transportation of bitumen blend for the Kirby South project will be provided
through a new 20 km, 16-inch diameter pipeline lateral from CNR's production
site to Inter Pipeline's Winefred Junction. This lateral connects to a new
30-inch pipeline constructed to transport bitumen blend from three regional oil
sands projects owned by FCCL. Approximately 20 km of new 10-inch pipeline has
also been constructed from Winefred Junction to the Kirby South site to provide
diluent transportation service. 


Construction began in the fall of 2012 and all new facilities are expected to be
in service in August 2013. A map showing the configuration of new facilities
related to the Kirby South project is available on our website at
www.interpipelinefund.com.  


Commercial Terms and Economics

The transportation agreement announced today will provide Inter Pipeline with
highly stable, long term cash flow. Under the terms of the contract, CNR will
make fixed annual transportation payments which are not dependent on actual
volumes shipped. All operating costs will also be recovered on a flow through
basis. 


Total capital expenditures are expected to be approximately $95 million based on
Inter Pipeline's 85% interest in the Cold Lake Limited Partnership. Inter
Pipeline expects to earn incremental EBITDA of $35 million per year once this
highly accretive project enters commercial service in August 2013. The
investment is expected to provide approximately $0.07 per unit in accretion
relative to cash available for distribution. 


Financing

Inter Pipeline's financing plan for the $95 million Kirby South connection has
been developed in tandem with capital funding plans for its $2.6 billion
integrated expansion program on the Cold Lake and Polaris systems. Inter
Pipeline anticipates that combined capital commitments will be met through a
combination of capacity available under its existing committed credit facility,
undistributed cash flow from operations, the periodic issuance of new term debt
and proceeds from existing distribution re-investment programs. In addition,
Inter Pipeline may supplement its capital requirements through the periodic
issuance of comparatively small amounts of underwritten equity. 


Inter Pipeline's financial position is supported by investment grade credit
ratings, a strong balance sheet and excellent access to capital markets. 


Inter Pipeline Fund

Inter Pipeline is a major petroleum transportation, natural gas liquids
extraction, and bulk liquid storage business based in Calgary, Alberta, Canada.
Structured as a publicly traded limited partnership, Inter Pipeline owns and
operates energy infrastructure assets in western Canada, the United Kingdom,
Denmark, Germany and Ireland. Additional information about Inter Pipeline can be
found at www.interpipelinefund.com. 


Inter Pipeline is a member of the S&P/TSX Composite Index. Class A Units trade
on the Toronto Stock Exchange under the symbol IPL.UN. 


Eligible Investors

Pursuant to Inter Pipeline's limited partnership agreement dated October 9,
1997, as amended, all unitholders are required to be residents of Canada. A copy
of the limited partnership agreement can be found at www.interpipelinefund.com
by selecting "Corporate Governance". If a unitholder is a non-resident of Canada
("Non-Eligible Unitholder"), he will not be considered to be a member of the
partnership effective as of the date Class A Units were acquired. Inter Pipeline
requires all Non-Eligible Unitholders to dispose of their Class A Units in
accordance with the limited partnership agreement. 


In most cases, a unitholder with an address outside of Canada will be a
Non-Eligible Unitholder.  


Disclaimer

Certain information contained herein may constitute forward-looking statements
that involve risks and uncertainties. Forward-looking statements in this news
release include, but are not limited to, timing and completion cost estimates
for the Kirby South project and forward EBITDA projections. Readers are
cautioned not to place undue reliance on forward-looking statements. Such
information, although considered reasonable by the General Partner of Inter
Pipeline at the time of preparation, may later prove to be incorrect and actual
results may differ materially from those anticipated in the statements made. For
this purpose, any statements that are not statements of historical fact may be
deemed to be forward-looking statements. Forward-looking statements often
contain terms such as "may", "will", "should", "anticipate", "expects" and
similar expressions. Such risks and uncertainties include, but are not limited
to, risks associated with operations, such as loss of markets, regulatory
matters, environmental risks, industry competition, potential delays and cost
overruns of construction projects including the transportation arrangements with
CNR, Cenovus and ConocoPhillips' FCCL Partnership, and the ability to access
sufficient capital from internal and external sources. You can find a discussion
of those risks and uncertainties in Inter Pipeline's securities filings at
www.sedar.com. The forward-looking statements contained in this news release are
made as of the date of this document, and, except to the extent required by
applicable securities laws and regulations, Inter Pipeline assumes no obligation
to update or revise forward-looking statements made herein or otherwise, whether
as a result of new information, future events, or otherwise. The forward-looking
statements contained in this document are expressly qualified by this cautionary
note. 


All dollar values are expressed in Canadian dollars unless otherwise noted. 

Non-GAAP Financial Measures

Certain financial measures referred to in this news release, namely, "EBITDA"
and "cash flow" are not measures recognized by GAAP. These non-GAAP financial
measures do not have standardized meanings prescribed by GAAP and therefore may
not be comparable to similar measures presented by other entities. Investors are
cautioned that these non-GAAP financial measures should not be construed as
alternatives to other measures of financial performance calculated in accordance
with GAAP.  


FOR FURTHER INFORMATION PLEASE CONTACT: 
Inter Pipeline Fund - Investor Relations:
Jeremy Roberge
Vice President, Capital Markets
403-290-6015 or 1-866-716-7473
jroberge@interpipelinefund.com


Inter Pipeline Fund - Media Relations:
Tony Mate
Director, Corporate and Investor Communications
403-290-6166
tmate@interpipelinefund.com
www.interpipelinefund.com
Canadian National Railway (TSX:CNR)
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