CALGARY, A.B. — Birchcliff Energy Ltd. and AltaGas Ltd. made a joint announcement Tuesday, saying they have entered into a long-term natural gas processing arrangement at AltaGas’ deep-cut sour gas processing facility in Gordondale.
The new arrangement, which will last for at least 15 years, will go into effect retroactive to January 1st, 2018 and will replace existing processing arrangements at the facility. Under the Processing Arrangement, Birchcliff is being provided with up to 120 million cubic feet per day of processing on a firm-service basis, with a take-or-pay obligation of 100 million cubic feet per day.
“This new arrangement with AltaGas provides long-term natural gas processing and will reduce our fees at the Gordondale Facility,” said Birchcliff President and CEO Jeff Tonken. “An added benefit of this arrangement for Birchcliff is that we will not have to incur significant capital to build our own deep-cut facility at Birchcliff’s natural gas processing plant in Pouce Coupe, Alberta. We had previously commenced the planning and initial work to further expand the processing capacity of our Pouce Coupe gas plant by 150 MMcf/d to 490 MMcf/d (Phase VII) and by 100 MMcf/d to 590 MMcf/d (Phase VIII). In light of this new processing arrangement, we currently have no plans to proceed with Phases VII or VIII.”
“The new arrangement with Birchcliff is a significant win for both parties,” said David Harris, President and Chief Executive Officer of AltaGas. “The Processing Arrangement allows us to maximize the long-term value and returns from the Gordondale Facility, which is one of our key assets. The agreement fills the existing capacity at the Gordondale Facility and significantly enhances the potential to flow third-party volumes through the facility and to grow those volumes, allowing us to eventually optimize the facility and bring the operating capacity up to 150 MMcf/d, while providing lower fees for Birchcliff. The long-term commitment from Birchcliff, potential for third-party volumes and the strategic proximity of this asset to the liquid-rich Montney fairway further strengthens our plans around the future expansion of the Gordondale Facility. In addition, AltaGas will also benefit from growing propane volumes which will be dedicated to our Ridley Island Propane Export Terminal as part of the commercial arrangements.”