Keyera Facilities Income Fund Announces Long-Term Oil Sands Services
Agreement with Imperial Oil

CALGARY , Nov. 12 /CNW/ - Keyera Facilities Income Fund ("Keyera") (TSX:KEY.UN; KEY.DB; KEY.DB.A) announced today that it has entered into a long-term agreement with Imperial Oil Resources Ventures Limited ("Imperial") to provide diluent transportation, storage and rail offload services in the Edmonton/Fort Saskatchewan area for Imperial's Kearl oil sands project. Diluent is a light hydrocarbon, most often condensate, which is blended with bitumen to enable it to flow via pipeline to upgrading facilities. This agreement will provide Keyera with secure, long-term, fee-for-service revenues, beginning in late 2012, as well as the potential to generate significant incremental new business opportunities.

Under the terms of the agreement, Keyera will transport diluent by pipeline from supply sources in the Edmonton area to a diluent delivery pipeline north of Fort Saskatchewan for delivery to the Kearl site located near Fort McMurray. Keyera will also provide diluent storage and rail offload services at the Alberta Diluent Terminal ("ADT") and the Edmonton Terminal, both owned 100% by Keyera, as well as at the Keyera operated Fort Saskatchewan Fractionation and Storage Facility ("KFS"). To provide these services to Imperial, Keyera will construct additional pipeline connections and pumping and metering facilities to extend and enhance its existing infrastructure.

"We are delighted to partner with Imperial, a recognized leader in the development of heavy oil and oil sands projects in Alberta" said Jim Bertram , President and CEO of Keyera. "The Kearl project is a world class oil sands development and our agreement with Imperial represents the next step in the development of our oil sands services growth strategy. The investments we have made to expand our facilities and develop new infrastructure over the past several years have strengthened our position in this region and enhanced our ability to handle the receipt, transportation and storage of diluent for oil sands producers such as Imperial. Our intention is to use this infrastructure to also provide cost effective services to other customers as the oil sands sector grows."

    
    Benefits to Keyera

    -   The agreement will generate stable, long-term fee-for-service
        revenues for Keyera. A substantial portion of the fees earned under
        this agreement are not dependent on throughput volumes.

    -   Upon start-up of Phase 1 of the Kearl project, currently expected in
        late 2012, Keyera anticipates that operating cash flow from the
        agreement will initially be in the range of $10 to $11 million
        annually, growing to approximately $16 million as Phases 2 and 3 of
        the Kearl project come on stream. This assumes that construction of
        the new Keyera operated facilities is completed on time and the Kearl
        project timing and bitumen production occurs as planned.

    -   The expansion of infrastructure in the Edmonton/Fort Saskatchewan
        area will provide Keyera opportunities to pursue arrangements with
        other third parties to utilize the excess capacity and to generate
        additional operating cash flow.

    -   The new pipeline and connections that Keyera will be constructing
        pursuant to this agreement will enhance its connectivity to diluent
        supply and diluent markets. This will increase Keyera's ability to
        meet demand for diluent services in the region, including its ability
        to offer:
        -  Storage in tanks and underground caverns at Keyera's facilities.
        -  Rail offload services at ADT and the Edmonton Terminal.
        -  Connections to diluent delivery pipelines servicing the Fort
           McMurray oil sand area and potentially the Cold Lake and Peace
           River oil sands areas.
        -  Marketing services in Keyera's commercial marketing hub at
           Edmonton and Fort Saskatchewan, including the provision of
           condensate supply.

    Description of Services

    -   Transportation - Under the agreement, Imperial will be provided with
        transport capacity within existing and new-build pipeline
        infrastructure to match Imperial's expected diluent requirements for
        its Kearl development. The transportation portion of the agreement
        has an initial term of 25 years.

        Keyera will invest in the following facility modifications: an 18
        kilometre extension to the Fort Saskatchewan pipeline system north
        from the KFS facility; a new pump station at the Edmonton Terminal;
        and a short pipeline connection to increase diluent supply into
        Keyera's Edmonton Terminal. These facilities are currently expected
        to cost approximately $58 million. Keyera intends to fund this
        expenditure from cash flow from operations and its existing credit
        facility.

        Imperial will pay an annual capital payment based on a portion of the
        new capital investment relating to their capacity commitment. In
        addition, Imperial will pay a per-barrel tariff for their volumes
        shipped on the existing Fort Saskatchewan pipeline system.

        The capacity of the new facilities will exceed Imperial's Kearl
        requirements. Keyera can use the remaining capacity to provide
        similar services to other oil sands customers.

    -   Storage - Under the agreement, Keyera will also provide Imperial with
        diluent storage services using its storage capacity in the
        Edmonton/Fort Saskatchewan area. The multiple supply connections and
        high rate injection/withdrawal capabilities will enable Keyera to
        meet Imperial's storage needs. Imperial will pay a fixed monthly fee
        for this service. The storage portion of the agreement has an
        initial term of 15 years.

    -   Rail Offload - Keyera will provide diluent offload services for
        Imperial at rail terminals located at ADT and the Edmonton Terminal.
        ADT and the Edmonton Terminal are currently connected to Keyera
        operated pipeline infrastructure and storage facilities in the
        Edmonton/Fort Saskatchewan area.
    

Imperial will pay a per-barrel fee for the rail offload service. The rail offload agreement is for a 5 year term.

Disclaimer

This document contains forward-looking statements that involve known and unknown risks and uncertainties, many of which are beyond Keyera's control. The forward-looking statements are based on management's current expectations and assumptions relating to Keyera's business, the environment in which it operates and the Kearl project. As the results or events predicted or implied in these forward-looking statements depend upon future events, actual results or events may differ materially from those predicted. Some of the factors which could cause actual results or events to differ materially include: the ability of Keyera to successfully implement strategic initiatives and the degree to which such initiatives yield the expected benefits; changes in operating and other costs; future operating results and the components of those results; any failure or delay in obtaining required regulatory approvals; fluctuations in the demand for natural gas, NGLs, crude oil and bitumen; changes in commodity prices; oil sands activity; the activities of producers, competitors, landowners, infrastructure owners and others; overall economic conditions; construction costs or delays; events affecting access to capital or the cost of financing; proposed or actual legislative changes, including in relation to the environment, royalties, oil sands development or energy infrastructure; and other known or unknown factors. There can be no assurance that the results or developments anticipated by Keyera will be realized or that they will have the expected consequences for or effects on Keyera.

For additional information on these and other factors, see Keyera's public filings on www.sedar.com. Unless otherwise required by applicable laws, Keyera does not intend to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise.

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For further information: about Keyera Facilities Income Fund, please visit our website at www.keyera.com or contact: John Cobb, Director, Investor Relations or Bradley White, Investor Relations Advisor. E-mail: [email protected], Telephone: [phone], Toll Free: [phone], Facsimile: [phone]