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British Columbia Premier Christy Clark at AtlaGas's Encana facility in Dawson Creek. Image courtesy of Province of British Columbia/Flickr.

Calgary-based companies AltaGas and Painted Pony Petroleum signed a 15 year strategic alliance Wednesday to develop processing infrastructure and marketing services for natural gas and natural gas liquids in British Columbia.

In the first phase of the partnership, AltaGas will construct and operate a 198 million cubic feet per day (Mmcf/d) shallow-cut gas processing facility in the Montney resource play.

The facility will be called the Townsend Facility.

Estimated cost for Townsend ranges from $297 to about $320 million (CAD 325-350 million).

The plant will be built and funded by AltaGas.

Painted Pony will maintain the right to a minimum 150 Mmcf/d of firm capacity.

The Townsend plant will be built 62 miles north of Fort St. John and 12 miles southeast of AltaGas’s Blair Creek plant.

Painted Pony has already been processing a large portion of its Montney production through the Blair Creek plant.

The plant is expected to go online by the end of 2015, subject to regulatory and other approvals.

AltaGas will also become the primary marketer for Painted Pony’s gas and NGL production from northeast British Columbia.

The deal will “provide preferred access to export opportunities” for LNG and NGLs from “existing and planned facilities,” Painted Pony said.

After the first phase is complete, further construction is possible, including a second phase of Townsend to build a deep-cut system for the enhanced recovery of additional NGLs and fractionation.

According to Canada’s National Energy Board (NEB) production at Montney was 1.7 billion cubic feet a day in 2013 and accounted for, slightly more than 12 percent of Canada’s total production that year.