NGTL acquisition of Pioneer Pipeline : NOVA Gas Transmission Limited (NGTL), a fully-owned subsidiary of TC Energy is set to acquire the Pioneer Pipeline, a 131km long natural gas pipeline in Alberta, Canada for CAD255 million ($183.45 million).
In this connection, NGTL has signed a letter of intent with Tidewater Midstream and Infrastructure and TransAlta Corporation.
Following the closing of the deal, the Pioneer Pipeline will be integrated into the nearly 25,000km long NGTL System, which has been carrying natural gas from the Western Canadian Sedimentary Basin to deliver fuel to both the Canadian and the US markets.
The Pioneer natural gas pipeline, which was laid from west of Drayton Valley to west of Edmonton, and is supported by 15-year firm delivery contracts for the supply of 328 million cubic feet per day (mmcf/d). The Canadian gas pipeline also has an eight-year firm receipt contract for the supply of 47 mmcf/d.
Tracy Robinson – Executive Vice-President and President, Canadian Natural Gas Pipelines at TC Energy, commenting on NGTL acquisition of Pioneer Pipeline, said: “This acquisition presents a unique opportunity to connect Western Canadian Sedimentary Basin (WCSB) supply to Alberta power generation demand, which supports coal-to-gas conversion and lowers carbon emissions.
“Utilizing the existing Pioneer Pipeline maximizes the use of existing infrastructure and provides the most efficient solution to deliver gas to this growing demand.”
TransAlta said that the deal gives it access to the highly liquid natural gas network and gas trading hub of the NGTL System and also more reliability and flexibility of having two natural gas pipelines to help meet the fuel supply needs of its power stations.
The Canadian electricity power generator, as part of the deal, will enter into long-term delivery transportation agreements with NGTL, to bring the total of new and existing natural gas pipeline transportation service to 400 TJ/day by the year 2023. The current commitments of TransAlta include the 139 TJ/day with Tidewater Midstream, which will remain in place until the closing of the deal.
Dawn Farrell – President and CEO of TransAlta, commenting on NGTL acquisition of Pioneer Pipeline, said: “Tidewater has been an exceptional partner that was able to build the Pioneer Pipeline well ahead of schedule, allowing us to significantly reduce our carbon emissions and costs.
“Going forward, we are excited to work with TC Energy to meet our transportation requirements as we continue to execute our clean energy strategy, which will support our goals as a leader in clean electricity generation.”
While Tidewater Midstream will get CAD138 million, TransAlta will get the remaining CAD117 million in proceeds from the sale of the Pioneer Pipeline.
The proposed acquisition of the Pioneer Pipeline by the NGTL pipeline system is subject to the signing of definitive agreements, which is likely to take place in the second quarter of this year. It would also need the approval of the Canadian Energy Regulator.