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    Tidewater in Pipe Deal to Supply TransAlta Power Plants


Tidewater Midstream has signed a letter of intent with generating utility TransAlta for the construction of a 120km pipeline in western Canada.

by: Dale Lunan

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Tidewater in Pipe Deal to Supply TransAlta Power Plants

Canadian midstream services provider Tidewater Midstream and Infrastructure signed a letter of intent December 6 with generating utility TransAlta for the construction of a 120km pipeline to deliver gas to a pair of power plants west of Alberta’s capital city of Edmonton.

The pipeline, initially rated at 130mn ft3/day (equivalent to 1.34bn m3/yr), would supply gas from Tidewater’s Brazeau River gas complex in west central Alberta to TransAlta’s Sundance and Keephills power plants, where two units at each will be converted from coal-fired generation to gas-fired generation in the 2021-2022 timeframe, a year earlier than originally planned. The pipeline would have expansion capacity to 340mn ft3/day, representing about half of TransAlta’s gas requirements at full capacity.

“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,” Tidewater CEO Joel MacLeod said. “This agreement with TransAlta enables Tidewater to transport production direct from the wellhead, through Tidewater's extensive natural gas processing and storage infrastructure network…to an end market.”

The decision to work with Tidewater advances the timeframe for construction of the pipeline, which should be in service by 2020, and provides TransAlta the opportunity to accelerate the conversion of the two power plants from coal to gas. TransAlta will also have the option to take a 50% ownership interest in the pipeline, which if exercised would reduce tolling costs.

“Construction of the natural gas pipeline supports our strategy of being a low-cost provider of firm, clean and reliable energy,” TransAlta CEO Dawn Farrell said. “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.”