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TransAlta and Tidewater announce letter of intent for gas pipeline construction

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World Pipelines,

TransAlta Corporation and Tidewater Midstream and Infrastructure Ltd. have announced that the two companies have entered into a letter of intent (LOI) for Tidewater to construct a 120 km natural gas pipeline from its Brazeau River Complex to TransAlta's generating units at Sundance and Keephills.

The Tidewater pipeline will facilitate TransAlta's strategy to convert its coal units at Sundance and Keephills to natural gas. Converting the coal units extends the operating life of the assets and significantly reduces operating costs and emissions.

The pipeline will provide initial capacity of 130 million ft3/d by 2020, and have expansion capability to 340 million ft3/d, which represents approximately 50% of TransAlta's gas requirements at full capacity. Under the LOI, TransAlta has the option to invest up to 50% in the pipeline.

"Construction of the natural gas pipeline supports our strategy of being a low cost provider of firm, clean and reliable energy," said Dawn Farrell, President and Chief Executive Officer of TransAlta. "In addition, having greater access to natural gas allows TransAlta to blend natural gas with the coal, prior to fully converting the units, allowing us to take advantage of low natural gas prices and reduce our carbon costs."

"Tidewater is excited to enter into a long-term arrangement with TransAlta which is supported by a 15 year take or pay agreement that provides oil and gas producers throughout Western Canada with direct connectivity to a new, large demand source," said Joel MacLeod, President and Chief Executive Officer of Tidewater. "This agreement with TransAlta enables Tidewater to transport production direct from the wellhead, through Tidewater's extensive natural gas processing and storage infrastructure network, direct to an end market."

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