CALGARY, Oct. 1, 2018 /CNW/ –
Definitive Agreement with TransAlta Corporation for intra-Alberta pipeline
Update on Pipestone Montney, Sour Deep-Cut Gas Processing Complex
Tidewater continues to progress its plans to construct and operate its previously announced Pipestone Montney, Sour Deep-Cut Gas Processing Complex (the “Pipestone Plant“) in the Pipestone area near Grande Prairie, Alberta. Tidewater is pleased to announce that a definitive agreement has been executed with a large oil and gas producer with respect to the previously announced (September 11, 2018) memorandum of understanding regarding a 25 MMcf/d commitment at the Pipestone Plant over a five-year term. The Pipestone Plant is designed to process approximately 100 MMcf/d of natural gas and is currently 80% contracted with firm commitments of 80 MMcf/d with the remaining capacity of 15-20 MMcf/d subject to non-binding letters of intent that are expected to be formalized by definitive agreements within 30 days. The additional agreements at the Pipestone Plant are expected to increase total forecasted annualized EBITDA from the project by 10% – 20%.
Overall project costs remain in-line with previous guidance with a forecast total capital outlay to Tidewater of approximately $210MM. This amount excludes the 32MW cogeneration units all or a portion of which Tidewater expects to monetize. The cogeneration units would generate both heat and electricity from the same fuel input to the Pipestone Plant. The units could be sold to a third party or to a subsidiary of Tidewater in connection with Tidewater’s power supply business. The sale of the cogeneration units was contemplated in the original Pipestone Plant project economics and is not expected to impact forecasted EBITDA. The Pipestone Plant remains subject to regulatory approval which Tidewater hopes to receive shortly.
Additional Tidewater applications remain before the Alberta Energy Regulator for infrastructure in the Pipestone area that would ultimately connect to the Pipestone Plant.
Crude oil storage, transportation and infrastructure agreements
Tidewater is pleased to announce that it has entered into crude oil storage and transportation agreements with various counterparties, including an investment grade counterparty. Tidewater will provide crude oil terminalling services at three existing Tidewater owned, operated and pipeline connected facilities in the Valhalla, Brazeau River and Achesonareas of Alberta. In addition, Tidewater will transport crude oil by rail to various markets in North America from its rail facility located at Acheson, Alberta utilizing Tidewater’s rail car fleet. The aforementioned agreements are for terms of less than twelve months, however, Tidewater intends to grow this business and negotiate longer term agreements with existing and new customers. Tidewater has currently invested minimal capital in new infrastructure related to crude oil storage and transportation services while also utilizing its existing infrastructure. Based on this minimal capital investment, Tidewater expects to generate approximately 5% – 10% of incremental annualized EBITDA in 2019.
Tidewater began its crude oil operations subsequent to the expiration of a non-competition covenant made by certain members of Tidewater’s executive in relation to the sale of a company prior to the formation of Tidewater.
The Corporation’s Business
Tidewater is traded on the TSX under the symbol “TWM”. Tidewater’s business objective is to build a diversified midstream and infrastructure company in the North American natural gas and natural gas liquids (“NGL”) space. Its strategy is to profitably grow and create shareholder value through the acquisition and development of oil and gas infrastructure. Tidewater plans to achieve its business objective by providing customers with a full service, vertically integrated value chain through the acquisition and development of oil and gas infrastructure including: gas plants, pipelines, railcars, trucks, export terminals and storage facilities.