TransAlta and Tidewater Midstream and Infrastructure Ltd. said Wednesday they’ve signed a letter of intent (LOI) for Tidewater to build a 120-kilometer (75-mile) natural gas pipeline from its Brazeau River Complex in Alberta Province, to TransAlta's power plants at Sundance and Keephills.
The Tidewater Pipeline will facilitate power generation owner-operator TransAlta's strategy to convert its coal units at Sundance and Keephills to natural gas.
The two plants currently have a combined generation capacity of roughly 2,900 megawatts, Kallanish Energy calculates.
"Construction of the natural gas pipeline supports our strategy of being a low-cost provider of firm, clean and reliable energy," said Dawn Farrell, president and CEO of TransAlta. "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."
Converting the coal units extends their operating life and significantly reduces operating costs and emissions, according to TransAlta.
The pipeline will provide initial capacity of 130 million cubic feet per day (MMcf/d) by 2020, and has expansion capability to 340 MMcf/d, which represents roughly 50% of TransAlta's gas requirements at full capacity. Under the LOI, TransAlta has the option to invest up to 50% 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, president and CEO of Tidewater.