News Releases - 2006

• Funds from operations* of $47.9 million, up $5.8 million or 13.7% over the same quarter last year
  
• Quarterly payout ratio* of 81.5%
• Net income of $29.1 million, up $2.2 million or 8.3% from the same quarter a year ago
• Completed acquisition of Tanklager-Gesellschaft Hoyer mbH for approximately $38 million
• Raised $150 million through successful Class A unit equity offering
• Transported a quarterly record of 312,100 barrels per day (b/d) on the Cold Lake pipeline system, up 9,200 b/d from the comparable period in 2005
• Southbound crude oil deliveries on the Bow River pipeline system sourced from Hardisty, Alberta to refining markets in the U.S. averaged 22,100 b/d, up 234% from Q1 2005
  
  * Please refer to the "Non-GAPP Financial Measures" section of the MD&A.

Funds From Operations

Inter Pipeline’s funds from operations during the quarter totaled $47.9 million, up $5.8 million or 13.7% over the same period in 2005. This increase is primarily due to the addition of Inter Pipeline’s recently acquired European bulk liquid storage businesses and strong commodity prices in the natural gas liquids (NGL) extraction business.

During the quarter, Inter Pipeline’s NGL extraction, conventional oil pipeline, oil sands transportation and bulk liquid storage business segments contributed $23.9 million, $20.8 million, $9.6 million, and $9.0 million respectively to funds from operations. This was offset by corporate charges totaling $15.4 million.

Cash distributions to unitholders during the quarter totaled $39.0 million, or $0.1950 per unit, representing a payout ratio of 81.5% of funds from operations. This is consistent with the 80.8% payout ratio that was achieved during the first quarter of 2005 and below Inter Pipeline’s targeted annual payout ratio of 90% to 95%. Financial results in the quarter were enhanced by strong market prices realized on propane plus (“C3+”) volumes produced at the Cochrane NGL extraction facility.

Inter Pipeline’s monthly cash distributions are currently $0.0650 per unit, or $0.78 per unit on an annualized basis. The regular monthly cash distribution rate is expected to be maintained subject to review from time to time by the Board of Directors of Inter Pipeline’s general partner, Pipeline Management Inc.

NGL Extraction

Inter Pipeline’s NGL extraction business benefited from favourable commodity prices in February and March and generated strong results during the first quarter. Combined, Inter Pipeline’s three NGL extraction facilities processed 4.5 billion cubic feet per day (bcf/d) of natural gas, producing an average of 156,800 b/d of NGLs, comprised of 100,500 b/d of ethane and 56,300 b/d of propane plus.

In 2006, Inter Pipeline expects to spend approximately $15 million to $17 million on organic growth projects in the NGL extraction business segment. These opportunities include several efficiency and optimization projects at the Cochrane and Empress facilities that will improve liquids recovery or reduce fuel and power consumption. In the first quarter, $0.9 million was incurred developing these organic growth projects.

Conventional Oil Pipelines

Throughput volumes on Inter Pipeline’s four conventional oil pipeline systems averaged 210,100 b/d during the first quarter, compared to 206,600 b/d for the same period last year. The increase in conventional volumes is primarily the result of improved weather conditions, and higher Bow River southbound volumes sourced at Hardisty, which averaged 22,100 b/d compared to 6,600 b/d in the first quarter of 2005. Conventional operating margins in the first quarter increased to $1.10 per barrel, up from $1.09 per barrel during the same period in 2005.

Inter Pipeline has a conventional oil pipeline 2006 growth capital program totalling $16 million to $18 million. These projects include the continued expansion of the Bow River Hardisty south pipeline, construction of interconnection facilities at the Kerrobert terminal and additional blending facilities. During the first three months of 2006, Inter Pipeline spent $6.0 million of growth capital on the conventional oil pipeline business.

Oil Sands Transportation

Throughput volumes on the Cold Lake pipeline system reached a new record averaging 312,100 b/d during the quarter. This represents an increase of 9,200 b/d over volumes delivered during the first quarter in 2005. Continued oil sands development by the three Cold Lake founding shippers, Imperial Oil, EnCana and Canadian Natural Resources, has increased the volumes transported on the Cold Lake pipeline system.

In the first quarter, Inter Pipeline incurred approximately $2.8 million of growth capital, primarily to expand capacity on the Cold Lake pipeline system. For 2006, Inter Pipeline is expecting to spend a total of approximately $27 million to $31 million of growth capital on the Cold Lake system to prepare for expected founding shipper production growth. Capital projects include the addition of capacity on the diluent pipeline from Edmonton to the Cold Lake area, and capacity expansions at the La Corey terminal, and Foster Creek and Wolf Lake pump stations.

Inter Pipeline’s bulk liquid storage business continued to produce strong and stable results. During the quarter, this segment contributed $31.6 million in revenue and $9.0 million to funds from operations. These results include the positive contribution from Tanklager-Gesellschaft Hoyer mbH, an independent bulk liquid storage business based in Germany that was acquired by Inter Pipeline on January 1, 2006.

During the first quarter, Inter Pipeline also advanced several organic growth opportunities in the United Kingdom. Approximately $0.9 million was spent on growth capital projects in the first three months of 2006, and a total of $12 million to $14 million is planned for 2006. Organic projects include the reconfiguration of existing tankage at the Immingham terminal to store biodiesel, and conversion of additional tanks to store heated black oil products to and from an adjacent ConocoPhillips refinery.

Financing Activity

On January 31, 2006, Inter Pipeline successfully raised gross proceeds of $150 million by issuing 15 million Class A units. Net proceeds of $142.2 million were used to reduce bank indebtedness.

At March 31, 2006, Inter Pipeline’s outstanding debt balance, including convertible debentures was $663 million, resulting in a total debt to total capitalization ratio of approximately 36%.

Conference Call

Inter Pipeline will hold a conference call and webcast today at 2:30 p.m. (Mountain Time) / 4:30 p.m. (Eastern Time) to discuss first quarter 2006 financial and operating results.

To participate in the conference call, please dial 888-280-8771 or 416-695-7848. A recording of the call will be available for replay until May 18, 2006, by dialing 888-509-0081 or 416-695-5275. The pass code for the replay is 620083.

A webcast of the conference call can be accessed on Inter Pipeline’s website at www.interpipelinefund.com under Investor Relations / Webcasts. A rebroadcast of the conference call will be available on the website for approximately 90 days.

Inter Pipeline is a major petroleum transportation, bulk liquid storage and natural gas liquids extraction 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, Germany and Ireland.

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

Disclaimer

Certain information contained herein may constitute forward-looking statements that involve risks and uncertainties. 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 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. 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.