TC Energy Corp. proposed to purchase the Pioneer Pipeline, a 131 km pipeline used to transport sweet natural gas in Alberta, for C$255 million.

NOVA Gas Transmission Ltd. (NGTL), a subsidiary of the Calgary, Alberta-based company, entered the proposed purchase agreement on March 12 through an exclusive letter of intent with Tidewater Midstream and Infrastructure Inc. and TransAlta Corp. The proposed purchase is subject to execution of definitive agreements, which is expected to occur in second-quarter 2020.

The Pioneer Pipeline runs from west of Drayton Valley to west of Edmonton in Alberta within the Western Canadian Sedimentary Basin. Tidewater completed construction of the pipeline, which connects its Brazeau River gas plant to TransAlta’s generating units at Keephills and Sundance, in June 2019—four months ahead of schedule.

As part of the transaction, TransAlta will enter into long-term delivery transportation agreements with NGTL. The acquisition is underpinned by 15-year firm delivery contracts for 328 million cubic feet per day (MMcf/d) and an eight-year firm receipt contract for 47 MMcf/d, according to the TC Energy release.

TC Energy expects its NGTL subsidiary to integrate the Pioneer Pipeline into its natural gas pipeline infrastructure system in Alberta upon closing of the transaction, which requires approval of the Canadian Energy Regulator. Spanning 25,000 km in length, the NGTL System delivers energy from the prolific Western Canadian Sedimentary Basin to millions of North Americans every day, the TC Energy release said.

“This acquisition presents a unique opportunity to connect Western Canadian Sedimentary Basin supply to Alberta power generation demand, which supports coal-to-gas conversion and lowers carbon emissions,” Tracy Robinson, executive vice president and president of Canadian natural gas pipelines at TC Energy, said in a statement. “Utilizing the existing Pioneer Pipeline maximizes the use of existing infrastructure and provides the most efficient solution to deliver gas to this growing demand.”

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