Tidewater, TransAlta Finalise Canadian Pipe Deal
Canada’s Tidewater Midstream & Infrastructure said October 1 it has finalised an agreement with power utility TransAlta to build and operate an initially 130mn ft³/day pipeline to deliver gas to a pair of central Alberta power plants that are being converted to natural gas from coal. More of the plants might be converted to gas later.
The agreement, building on a letter of intent (LOI) signed between the two companies in late 2017, provides for the construction of a 120-km pipeline from Tidewater’s Brazeau River Complex in west central Alberta to TransAlta’s Sundance and Keephills generating stations, west of Edmonton. The pipeline will be supported by a 15-year ship-or-pay agreement with TransAlta, which also has the option to acquire a 50% ownership interest in the project, which it is likely to exercise, Tidewater said in a news release.
The initial capacity of the pipeline has been set at 130mn ft³/day but additional engineering work since the LOI was struck has prompted Tidewater and TransAlta to increase the design capacity to 440mn ft³/day from 340mn ft³/day by adding compression. As a result, the estimated capital cost of the pipeline has gone up by between 5% and 10% from the original estimate of C$150mn ($117mn).
The pipeline is expected to be in service in 2H 2019, subject to customary conditions and receipt of regulatory approvals.