Tidewater Midstream and Infrastructure Ltd. and TransAlta Corporation have entered into a Letter of Intent for Tidewater to construct a 120 km natural gas pipeline from Brazeau River Complex ("BRC") to TransAlta's generating units at Sundance and Keephills. The pipeline is expected to cost approximately $150 million and is supported by a 15 year take or pay agreement with TransAlta.
The pipeline will provide initial capacity of 130 MMcf/d by 2020, and have expansion capability to 340 MMcf/d, which represents approximately 50% of TransAlta's gas requirements at full capacity of the generating units at Sundance and Keephills. Under the LOI, TransAlta has the option to invest up to 50% in the pipeline.
"Construction of the natural gas pipeline supports our strategy of being a low-cost provider of firm, clean and reliable energy," said Dawn Farrell, President and Chief Executive Officer of TransAlta. "In addition, having greater access to natural gas allows TransAlta to blend natural gas with the coal, prior to fully converting the units, allowing us to take advantage of low natural gas prices and reduce our carbon costs."
"Tidewater is excited to enter into a long term arrangement with TransAlta which is supported by a 15 year take or pay agreement that provides oil and gas producers throughout Western Canada with direct connectivity to a new, large demand source," said Joel MacLeod, President and Chief Executive Officer of Tidewater. "This agreement with TransAlta enables Tidewater to transport production direct from the wellhead through Tidewater's extensive natural gas processing and storage infrastructure network direct to an end market."