DBRS Morningstar Comments on the Unplanned Outage at Inter Pipeline Ltd.’s Heartland Petrochemical Complex, No Change in BBB (low) Ratings

DBRS Limited (DBRS Morningstar) notes the update provided by Inter Pipeline Ltd. (IPL or the Company; rated BBB (low) with a Stable trend by DBRS Morningstar) on the Heartland Petrochemical Complex (HPC) as part of its second-quarter results. HPC underwent repairs at its propane dehydrogenation facility, leading HPC to be shut down for most of the quarter. IPL also noted that HPC is currently operating at 90% of its rated capacity with a planned ramp-up to full capacity in the next few weeks.

DBRS Morningstar does not expect the shutdown to affect ratings at this point in time. Ramping up production at a new and large petrochemical plant is a complicated process, and DBRS Morningstar recognizes the possibility of modest delays. The expectations, based on base case assumptions, had HPC fully ramping up in H2 2023 with 2024 being the full year of operations. While there is a modest delay, the latest update on HPC provided by the Company is still largely consistent with DBRS Morningstar’s base case HPC ramp-up assumptions. Nevertheless, DBRS Morningstar considers HPC to be the key rating driver and will continue to closely monitor its progress. Further material delays at HPC—which could disrupt the assumption of 2024 being the full year of operations, and in turn put the improvement in credit metrics at risk—could have a negative impact on the ratings.

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