Fengate Capital Management has acquired a 102MW natural gas powered cogeneration facility to be built in the proposed C$3.5bn ($2.7bn) Heartland Petrochemical Complex near Edmonton in Canadian province Alberta from Inter Pipeline.

Heartland Petrochemical Complex-cogeneration facility

Image: The CUB cogeneration facility in the Heartland Petrochemical Complex. Photo: courtesy of Fengate Capital Management Ltd.

The cogeneration facility called as Central Utility Block (CUB) is to be constructed with an investment of C$600m ($463.14m). As per the transaction terms, Inter Pipeline will recover all the development capital it has spent on the cogeneration facility while Fengate will take over full responsibility for funding its construction.

The Canadian private equity firm has engaged Inter Pipeline to handle the construction of the CUB cogeneration facility in addition to its daily operations once commissioned.

Fengate said that the partnership will help ensure that the cogeneration plant will be safely and efficiently managed for the long-term benefit of both the companies.

Inter Pipeline president and CEO Christian Bayle said: “We are very pleased with the results of this competitive sales process.

“By partnering with a quality firm like Fengate for the development of the CUB, Inter Pipeline has meaningfully reduced its overall capital cost obligation for the Heartland Complex.”

Apart from acquiring the cogeneration facility, Fengate has also signed long-term agreements for the supply of electricity, steam and other key utilities and other utilities to the Heartland Petrochemical Complex in return of structured capital and operating recovery fee payments from Inter Pipeline.

Fengate infrastructure investments managing director Andrew Cogan said: “We are impressed with the quality of Inter Pipeline’s track record, strategy, operations and people, and this significant acquisition is an excellent fit with our power and energy infrastructure strategy.

“This investment partners Fengate alongside a leader in the energy infrastructure sector and will provide stable, long-term returns for our investors.”

The CUB cogeneration facility is scheduled to begin operations by mid-2021. On the other hand, the Heartland Petrochemical Complex in Strathcona County, which is to be commissioned a little later than the CUB, will feature integrated propane dehydrogenation and polypropylene plants.

The new petrochemical Complex in Alberta will have an annual production capacity of 525,000 tonnes of polypropylene pellets, which are converted from locally procured, low-cost propane.