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Kelt Exploration signs processing letter of intent with AltaGas

AltgaGas' Townsend Facility near Fort St. John. Photo supplied by AltaGas
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FORT ST. JOHN, B.C. – Kelt Exploration Ltd. announced late last week that it has signed a letter of intent with AltaGas Ltd. to process 75 million cubic feet per day of raw gas under a 10 year arrangement at AltaGas’ proposed Townsend Deep Cut Gas Plant, which is expected to be built and operational by the fourth quarter of 2019.

Kelt said in a release that the Townsend Deep Cut Plant can be expanded to 198 million cubic feet per day of capacity, and that the company has the option over the first three years of the agreement to commit to additional processing up to a maximum of 198 million cubic feet per day for a term of its choice, with a minimum of an additional 10 years. The company added that the liquids yield extracted from the Company’s Montney gas is expected to be approximately 70 barrels per million cubic feet at Townsend Deep Cut, a significant increase compared to yields of 28 barrels per million cubic feet and 48 barrels per million cubic feet respectively, that it currently gets from the two third-party gas plants it currently processes its Montney gas.

The letter of intent also stipulates three commercial arrangements, all of which are subject to negotiation:

  • construction of a raw gas gathering pipeline from Inga to Townsend, which may include additional sales gas and liquids egress infrastructure;
  • AltaGas shall provide firm transportation service on AltaGas’ existing liquids pipelines for Kelt’s share of C3+ and C5+ produced at the Townsend Deep Cut Gas Plant to AltaGas’ North Pine Fractionation Facility (“North Pine”); and
  • AltaGas shall provide firm fractionation and terminalling service at North Pine for Kelt’s share of C3+ and C5+ produced at the Townsend Deep Cut Gas Plant.

In addition, Kelt expects to enter into a marketing arrangement with AltaGas whereby all of the Company’s propane delivered to North Pine will receive Far East Index pricing.

Last July, Kelt announced that it had bought an infrastructure package that includes four 4,700 horsepower gas compressors with a capacity of 100 million cubic feet per day and two 50 million cubic feet per day gas dehydration units for $12.5 million.

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