TransAlta Corp. and Tidewater Midstream and Infrastructure Ltd. have entered into a Letter of Intent (LOI) for Tidewater to construct a 120 km natural gas pipeline from its Brazeau River Complex to TransAlta’s generating units at Sundance and Keephills.
The Tidewater Pipeline will facilitate TransAlta’s strategy to convert its coal units at Sundance and Keephills to gas. Converting the coal units extends the operating life of the assets and significantly reduces operating costs and emissions.
“Construction of the natural gas pipeline supports our strategy of being a low-cost provider of firm, clean and reliable energy,” said Dawn Farrell, TransAlta president and CEO. “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.”
The pipeline will provide initial capacity of 130 MMcf/d by 2020, and have expansion capability to 340 MMcf/d, which represents approximately 50 percent of TransAlta’s gas requirements at full capacity. Under the LOI, TransAlta has the option to invest up to 50 percent in the pipeline.
“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, Tidewater president and CEO. “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.”