TC Energy Corp.’s western supply grid, Nova Gas Transmission Ltd. (NGTL), has signed a letter of intent to buy natural gas power supply conduit Pioneer Pipeline from TransAlta Corp. and Tidewater Midstream Ltd. for C$255 million ($190 million).

The acquisition would be underpinned by 15-year firm delivery contracts for 328 MMcf/d and an eight-year firm receipt contract for 47 MMcf/d.

TransAlta and Tidewater built Pioneer to move more supply via natural gas versus coal.

“This acquisition presents a unique opportunity to connect Western Canadian Sedimentary Basin (WCSB) supply to Alberta power generation demand, which supports coal-to-gas conversion and lowers carbon emissions,” said TC’s Tracy Robinson, president of Canadian Natural Gas Pipelines.

The 131-kilometer (79-mile) pipeline, which is sited within Alberta, runs from west of Drayton Valley to west of Edmonton.

“Utilizing the existing Pioneer Pipeline maximizes the use of existing infrastructure and provides the most efficient solution to deliver gas to this growing demand.”

The proposed purchase is subject to executing definitive agreements, expected to occur in 2Q2020. The acquisition and operation of Pioneer Pipeline by NGTL also requires approval of the Canadian Energy Regulator.