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AltaGas to purchase half of Black Swan Aitken Creek processing facility

CALGARY, A.B. – AltaGas will purchase 50 percent ownership of Black Swan’s Aitken Creek processing facility.

AltaGas will spend $230 million on the acquisition and new infrastructure for the project.  Once the purchase is complete, AltaGas and Black Swan will enter into long-term processing, transportation and marketing agreements that also include new AltaGas Liquids handling infrastructure.

“This joint venture with Black Swan further strengthens our position and capture area in one of the most prolific natural gas basins in North America and showcases our competitive position in gas processing and export,” said David Cornhill, Chairman and interim co-Chief Executive Officer of AltaGas. “It expands our liquids handling capabilities in Northeast B.C. and reflects the strong demand we are seeing for our integrated gas strategy and propane export solution.”

AltaGas is pursuing, total propane supply from it’s North Pine C3+ facility of 40,000 bbl/d, up from the current 10,000.  The propane supply will then feed the Ridley Island Propane Export Terminal.

“Over the next few years our gas business will continue to be a large driver of growth and an area of significant investment,” continued Mr. Cornhill.  “We continue to see strong interest in our integrated gas processing and energy export solution and look forward to partnering with other Northeast B.C. producers in the liquids-rich Montney region,” concluded Mr. Cornhill.

The long-term processing agreement for use by Black Swan of AltaGas’ processing capacity at the Aitken Creek Processing Facilities will be underpinned by a reserve dedication and area of mutual interest encompassing approximately 30% of the Black Swan Montney lands as well as a priority of fill arrangement for AltaGas capacity ownership in the facilities. Black Swan will continue to operate the North Aitken Creek Processing Facilities.

The transaction is anticipated to close in early October 2018, subject to satisfaction of customary closing conditions.

Raw gas processing
Under the terms of the commercial arrangements, AltaGas will acquire 50% ownership in the existing 110 MMcf/d North Aitken Creek Gas Plant and in Black Swan’s 100 MMcf/d Aitken Creek Gas Plant which is currently under construction. AltaGas will have the option to participate in two additional plant phases including the potential for enhanced liquids recoveries which could more than double the NGL output of the Aitken Creek Processing Facilities.

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The investment in the Aitken Creek Processing Facilities includes $136 million in 2018 and an estimated $50 million in Q4/2019. The Aitken Creek Processing Facilities will have an estimated 210 MMcf/d (gross) operational capacity with the potential for future expansions to increase processing capacity up to 360 MMcf/d (gross).

Liquids handling and field fractionation
Black Swan will enter into an arrangement that includes existing, and new AltaGas owned and operated infrastructure.  The existing infrastructure that will be utilized by Black Swan includes AltaGas’ liquids pipelines from Townsend to North Pine and fractionation and terminalling at North Pine. The new infrastructure will include liquids pipelines from North Aitken Creek to Townsend and liquids handling at Townsend that will require a capital investment of $40 million in 2019.

Energy exports
Black Swan will also enter into marketing arrangements with AltaGas pursuant to which more than 50% of Black Swan’s propane produced at North Pine will be exported through RIPET and will receive premium Far East Index pricing under a long-term arrangement. The marketing arrangements also include optionality for Black Swan to increase the term and/or volume of its RIPET commitment throughout the term of the upstream processing arrangements.

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