TC Energy, through its wholly owned subsidiary NOVA Gas Transmission (NGTL), has signed a letter of intent with Tidewater Midstream and Infrastructure and TransAlta to purchase the Pioneer Pipeline for $255m.

Located within Alberta, the pipeline runs from west of Drayton Valley to west of Edmonton.

The transaction is supported by firm delivery contracts for 328 million cubic feet per day (mmcf/d) for 15 years and a firm receipt contract for 47mmcf/d for eight years, said the company.

TC Energy president and chief executive officer Dawn Farrell said: “Tidewater has been an exceptional partner that was able to build the Pioneer Pipeline well ahead of schedule, allowing us to significantly reduce our carbon emissions and costs.

“Going forward, we are excited to work with TC Energy to meet our transportation requirements as we continue to execute our clean energy strategy, which will support our goals as a leader in clean electricity generation.”

The acquisition of Pioneer Pipeline requires approval of the Canadian Energy Regulator

Through the transaction, NGTL will integrate the 131km operating pipeline of Pioneer Pipeline into its natural gas pipeline infrastructure in Alberta.

The pipeline sale is expected to TransAlta to gain access to NGTL’s highly liquid natural gas network and gas trading hub. It will also provide the company access to a broad and diversified group of gas producers and resource basins.

In addition, TransAlta is expected to hold additional reliability and flexibility with two pipelines delivering natural gas its power stations.

The transaction is expected to be completed, subject to signing of definitive agreements, and customary regulatory approvals, including approval of the Canadian Energy Regulator, in the second quarter of 2020.

Canadian Natural Gas Pipelines executive vice-president and president Tracy Robinson said: “This acquisition presents a unique opportunity to connect Western Canadian Sedimentary Basin (WCSB) supply to Alberta power generation demand, which supports coal-to-gas conversion and lowers carbon emissions.

“Utilizing the existing Pioneer Pipeline maximizes the use of existing infrastructure and provides the most efficient solution to deliver gas to this growing demand.”