TC Energy to Acquire Pioneer Pipeline
Canada’s TC Energy said March 12 it had signed an exclusive letter of intent with Tidewater Midstream and power utility TransAlta to acquire, for C$255mn (US$185mn), a 131-km natural gas pipeline serving two central Alberta power plants that re being converted to natural gas from coal.
The Pioneer Pipeline, which runs from Tidewater’s Brazeau River complex in west-central Alberta to TransAlta’s Keephills and Sundance generating stations west of Edmonton, became operational in 2019. Upon closing of the transaction, TC Energy will integrate Pioneer into its Nova Gas Transmission Limited (NGTL) system serving produces throughout western Canada.
“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,” said Tracy Robinson, TC Energy’s executive vice-president and president of its Canadian Natural Gas Pipelines division. “Utilizing the existing Pioneer Pipeline maximizes the use of existing infrastructure and provides the most efficient solution to deliver gas to this growing demand.”
The acquisition, TC Energy said, is underpinned by 15-year firm service delivery contracts for 328mn ft3/day and an eight-year firm receipt contract for 47mn ft3/day.
The proposed purchase remains subject to the execution of definitive agreements, expected to occur in 2Q 2020, and the approval of the Canada Energy Regulator.
Conversions of the Keephills and Sundance generating stations – which are currently fueled by a combination of natural gas and coal – to exclusive natural gas service are expected to be completed by the end of 2023.