AltaGas Ltd. and Painted Pony Petroleum Ltd. signed definitive agreements to enter a 15-year strategic alliance for the development of processing infrastructure and marketing services for natural gas and NGL, the companies announced Aug. 19.

The alliance will provide for development of liquids-rich gas processing infrastructure in northeast British Columbia and preferred access to international markets for Painted Pony’s Montney production. The first stage of the alliance includes construction and operation by AltaGas of a 198 million cubic feet per day shallow-cut gas processing facility in the Montney resource play. Painted Pony will maintain the right to at least 150 million cubic feet per day of the facility’s capacity. Once the first stage is completed, further expected buildouts include a second phase expansion of the Townsend facility to add processing and transport capacity. AltaGas will also become the primary marketer for Painted Pony’s natural gas and NGL production from northeast British Columbia.

The facility, called the Townsend facility, will be located about 100 kilometers (62 miles) north of Fort St. John and 20 kilometers (12 miles) southeast of AltaGas’ Blair Creek facility, through which Painted Pony processes a significant portion of its Montney production. The facility is expected to cost about CA$325 million to CA$350 million (US$297 million to US$320 million) and to enter service by the end of 2015, subject to regulatory and other customary approvals.