AltaGas Ltd. has agreed to acquire from Tidewater Midstream and Infrastructure Ltd. certain natural gas processing plants and natural gas storage infrastructure in Canada for $650 million.
Through the deal, AltaGas would acquire the Pipestone Natural Gas Processing Plant Phase I and Phase II expansion project; the adjacent Dimsdale natural gas storage; the Pipestone condensate truck-in/truck-out terminal; and the associated gathering pipeline systems.
Pipestone Phase I is a modern sour deep-cut natural gas plant with 110 MMcfd of processing capacity and 20,000 b/d of liquids handling capacity in the Alberta Montney (OGJ Online, Sept. 27, 2019). It is 100% contracted with about 85% of the volumes coming from long-term take-or-pay contracts. The plant includes 67 km of natural gas gathering pipelines tied into key production regions and provides egress connections to the NGTL and the Alliance pipeline systems.
Pipestone Phase II is a fully permitted, shovel-ready expansion project expected to provide an additional 100 MMcfd of sour deep-cut natural gas processing capacity and an additional 20,000 b/d of liquids handling capabilities. Pipestone Phase II is expected to come onstream in 2025.
The Pipestone transaction expands AltaGas’s footprint in the Alberta Montney and de-risks global exports by adding long-term LPG supply, including 3,500 b/d in 2024, 6,500 b/d in second-half 2025, and the potential for 11,500 b/d over the long-term through incremental processing capacity additions beyond Pipestone Phase II, AltaGas said in a release Aug. 31.
Dimsdale storage, which lies east of Pipestone I and II, has current working gas capacity of 15 bcf, which can be increased to 69 bcf.
The deal is contingent on Tidewater and AltaGas making a positive final investment decision (FID) for the Pipestone Phase II project. To help reach FID, AltaGas and Tidewater will create a new joint venture to advance the final steps required to develop and construct the project. Terms of the JV permit the parties to continue to collaborate on the Pipestone Phase II project, even if the acquisition does not proceed, the company said.
Subject to regulatory approvals and customary closing conditions, the deal is expected to close before yearend.