TransAlta Corporation and Tidewater Midstream and Infrastructure Ltd. have entered into a Letter of Intent (LOI) for Tidewater to construct a 120-kilometer natural gas pipeline from its Brazeau River Complex to TransAlta’s generating units at Sundance and Keephills. The pipeline is expected to cost approximately $150 million and is supported by a 15 year take or pay agreement.
The Tidewater Pipeline will facilitate TransAlta’s strategy to convert its coal units at Sundance and Keephills to natural gas. Converting the coal units extends the operating life of the assets and significantly reduces operating costs and emissions.
The pipeline will provide initial capacity of 130 MMcf/d by 2020, and have expansion capability to 340 MMcf/d, which represents approximately 50% of TransAlta’s gas requirements at full capacity. Under the LOI, TransAlta has the option to invest up to 50% in the pipeline.
“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 Chief Executive Officer 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.”