AltaGas opened Canada's first propane export terminal on Ridley Island in 2019.

AltaGas completes acquisition of Pipestone assets

Jan. 4, 2024
Addition of natural gas production, storage, and transportation infrastructure in Alberta’s Montney Formation delivers long-term LPG supply, enables ‘meaningful’ growth

AltaGas recently closed its acquisition of the Pipestone assets that include a truck terminal in a transaction the infrastructure company says expands its footprint in the Montney Formation in Alberta, Canada, and provides a “meaningful, long-term” liquified petroleum gas (LPG) supply for its global exports platform.

Pipestone assets also include two phases of a natural gas processing plant expansion project, the adjacent natural gas storage facility, and associated gathering pipeline systems from Tidewater Midstream and Infrastructure. The “truck-in, truck-out” terminal features a loading rack for condensate, the company reported.

Following completion of “key de-risking milestones,” AltaGas also declared a positive “final investment decision” (FID) in the Pipestone Phase II expansion project, which is expected to begin construction this year.

“Closing this transaction and reaching a positive FID on Pipestone Phase II significantly strengthens our position in one of Canada’s most prolific resource plays,” Vern Yu, AltaGas president and CEO, said in a news release. “This acquisition is consistent with our long-term strategy through adding long-life infrastructure assets with highly contracted take-or-pay and fee-for-service revenue. The transaction also diversifies our customer base, brings meaningful long-term LPG supply to our global exports platform, and provides long-term growth through the Pipestone Phase II expansion and has the potential for additional expansion phases.”

The expansion project now is 100% contracted under long-term take-or-pay agreements with a combination of marquee independent and investment grade producers, AltaGas added. All Pipestone Phase II customers who are existing Pipestone Phase I customers also have agreed to multi-year contract extensions, further improving the long-term commercial profile of the Pipestone assets.

With inclusion of these new agreements, the Pipestone acquisition is risk accretive to AltaGas, with the company’s take-or-pay and fee-for-service midstream EBITDA mix set to increase by an estimated 6%, with a commensurate decrease in commodity-exposed EBITDA, once Phase II comes online. In aggregate, more than 90% of the Pipestone assets’ normalized EBITDA is expected to come from take-or-pay or fee-for-service based contracts.

The expansion project will be constructed on a fixed-price turnkey basis for the majority of the capital costs and will deliver critical gas processing and liquids handling capacity in the Pipestone region, which is one of the fastest growing liquids-rich natural gas developments in Canada.

“AltaGas welcomes its new customers, employees, contractors, and other stakeholders as part of this acquisition and looks forward to working together,” AltaGas maintained. “The company is excited to continue to support the robust growth in the Alberta Montney with key gas processing, liquids handling, and gas storage assets, all with global LPG connectivity that will facilitate the best outcomes for the Canadian energy industry.”

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