Tidewater Midstream and Infrastructure will lay out a 120km long, $150m natural gas pipeline from its Brazeau River Complex (BRC) to TransAlta’s generating units at Sundance and Keephills in the Canadian province of Alberta.
In this regard, the Calgary-based clean electricity provider TransAlta and Tidewater have signed a Letter of Intent (LOI).
The pipeline will have an initial capacity of 130 MMcf/d by 2020. It will also have an expansion capability to 340MMcf/d, which represents about half of the gas requirements of TransAlta at full capacity.
The inter-Alberta pipeline network will help in the implementation of TransAlta’s strategy to convert its coal units at Sundance and Keephills to natural gas.
Tidewater president and CEO Joel MacLeod said: “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.
“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.”
According to TransAlta, the conversion of the coal-fired units would extend their operating life besides reducing operating costs and emissions significantly.
TransAlta president and CEO Dawn Farrell said: “Construction of the natural gas pipeline supports our strategy of being a low-cost provider of firm, clean and reliable energy.
“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.”
As per the LOI, TransAlta has the option to cover up to 50% of the investment needed for the pipeline, which, if exercised, would cut down the costs related to the tolling agreement.