AltaGas to acquire Montney midstream assets
Canadian midstream company AltaGas said August 31 it had entered into a definitive agreement to acquire Tidewater Midstream’s Pipestone natural gas processing assets in the Montney for C$650mn (US$480mn) in cash and shares.
The C$650mn consideration is comprised of C$325mn in cash and 12.5mn common shares of AltaGas priced at C$26.07/share. The transaction is expected to close prior to year-end 2023.
The transaction includes the operating Pipestone Phase 1 processing plant, with 110mn ft3/day of deep-cut sour gas processing capacity and 20,000 barrels/day of liquids handling capacity, and a proposed Pipestone Phase 2 expansion project, which would add an incremental 100mn ft3/day of processing capacity and 20,000 barrels/day of liquids handling capacity.
“We are excited that the Pipestone transaction will strengthen our midstream value chain,” AltaGas CEO Vern Yu said. “The acquisition is consistent with AltaGas’ long-term strategy and provides us the opportunity to support industry-leading producers’ growth plans in one of Canada’s most prolific resource plays.”
Also included is the adjacent Dimsdale natural gas storage facility, with working gas capacity of 15bn ft3 expandable to 69bn ft3. It is connected to the Alliance and NGTL systems and is upstream of existing NGTL bottlenecks.
“The Dimsdale facility is a strategic natural gas storage asset that connects to the NGTL and Alliance pipeline systems and will provide Pipestone customers with egress certainty and the ability to manage pipeline maintenance and service disruptions in the years ahead,” Yu said. “The Dimsdale facility will also be one of only three facilities that will be able to serve the balancing needs of the Montney and Canadian LNG demand pulls mid-decade and will be the only integrated processing and storage facility in the Montney.”
The acquisition is contingent upon AltaGas and Tidewater making a positive final investment decision (FID) for the Pipestone Phase 2 expansion project. To facilitate that, the two have entered into an agreement to create a new joint venture to advance the final steps required to develop and construct the project.