Canadian power generation developer TransAlta Corp. will build a new cogeneration power plant in Alberta for natural gas processing firm SemCAMS.
TransAlta will initially take on all capital costs during construction of the $105 million cogeneration plant. The 40-MW facility will provide power and steam to SemCAMS’ Kaybob South No. 3 sour gas processing plant.
Kaybob South No. 3 is located in the Western Canadian Sedimentary Basin and takes in natural gas production out of the Montney and Duvernay formations. SemCAMS will acquire a 50-percent stake in the new plant when it becomes commercially operational sometime around late 2021, according to reports.
“We are very pleased to collaborate with SemCAMS on this project which will enhance their operational and energy efficiency through on-site cogeneration,” said Dawn Farrell, President and Chief Executive Officer of TransAlta. “This project represents an important addition to our on-site cogeneration business and we welcome SemCAMS as a valued new customer and partner.”
All of the steam and half of the electricity generated by the plant will be contracted to SemCAMS under a 13-year fixed-price contract. TransAlta will sell the other half of electricity output into the Alberta Power market.
The development of the cogeneration facility at Kaybob South No. 3 will eliminate the need for traditional boilers and reduce annual carbon emissions of the operation by approximately 100,000 metric tons, which is equivalent to removing 20,000 vehicles off Alberta roads, according to the release.
“We are excited to partner with TransAlta on this highly strategic project which will enable SemCAMS to further reduce the annual carbon emissions from its facility while lowering operating expenses for the Kaybob 3 producers” said Dave Gosse, president of SemCAMS. “The cogeneration facility is an important addition to SemCAMS’ growing midstream portfolio and furthers SemCAMS’ focus on providing reliable, low-cost processing solutions to our customers.”
TransAlta owns power generation assets in Canada, the U.S. and Australia. SemCAMS is a joint venture of SemGroup and KKR.
Last month, SemGroup Corp. announced it was being acquired by Energy Transfer Partners in a deal estimated at $5 billion.