AltaGas Ltd. (TO: ALA) and Painted Pony Petroleum Ltd. (OTC: PDPYF) 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 Calgary-based 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 (MMcf/d) shallow-cut gas processing facility in the Montney resource play. Painted Pony will maintain the right to at least 150 MMcf/d 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 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 $297 million to $320 million (C$325 million to C$350 million) and to enter service by the end of 2015.