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AltaGas to build processing facilities supplying Ridley Island export project

AltaGas Ltd. entered into a nonbinding letter of intent to build a 120 MMcf/d deep-cut natural gas processing facility, an NGL separation train and a rail terminal at the Montney in an area separate from the company's current operations.

The agreement with a Montney producer, signed Jan. 20, involves joint ownership of the processing facility, with the NGL separation train and rail terminal to be fully owned by AltaGas, according to a Jan. 23 news release.

The facilities would be connected to the CN rail network, allowing for the transport of propane to the Ridley Island propane export terminal in British Columbia, which has received a positive final investment decision from AltaGas.

AltaGas estimated costs for the processing facility at about C$100 million to C$110 million, and for the NGL separation train and rail terminal at about C$60 million to C$70 million. The facilities would be supported by long-term, take-or-pay and dedication commercial agreements, according to the release.

"This development broadens our customer base and drives continued growth for our midstream business, including our energy export strategy," said David Harris, president and CEO of AltaGas.

The company aims to reach definitive agreements during the first quarter of 2017. The project is expected to begin service in early 2019.