Painted Pony Petroleum Ltd. entered a contract with Spectra Energy Transmission through a definitive agreement to provide long-term natural gas transportation in British Columbia. This is part of the plan to develop and deliver 240 million cubic feet per day (MMcf/d) of gas and liquids volume by year-end 2016, the company said June 29.

There will be 220MMcf/d of firm capacity on the T-North Pipeline, beginning Nov. 1, 2016, through the Spectra contract. The 25-year term is for 200MMcf/d and the 18-year, eight-month term is for 20MMcf/d.

The Spectra contract will coincide with the startup of the AltaGas Townsend gas processing plant, which will be operational by mid-2016, Painted Pony said. After AltaGas starts up, Painted Pony’s volumes should reach 260MMcfe/d by the end of 2016, including a 150MMcf/d minimum volume from the plant.

The Spectra pipeline contract will allow 220MMcf/d of gas to reach Station 2 or Sunset Creek. Station 2 will supply Pacific Northwest markets in Canada and the U.S., and possibly LNG export facilities. Sunset could feed into the Alberta natural gas pipeline network, reaching the AECO hub and eastern markets.

Proposed LNG export projects include the AltaGas-Idemitsu Douglas Channel project at Kitimat, expected in service in 2018.

Additionally, Painted Pony recently completed two horizontal lower Montney wells, using the parallel-pair completion technology in the Townsend area.

On initial cleanup and flowback, they tested at an average combined rate of 8.3MMcf/d of raw gas plus liquids over about 83 hours. During the last six hours of testing the combined average flow rate was 18.4MMcf/d of raw gas plus liquids.

Liquids will be processed at the AltaGas Townsend facility, the company said.

The wells were been shut in, and flow testing will resume in third-quarter 2015 after wellhead equipment is installed.

The pre-drilling program for the AltaGas facility began, the company said. To date, four wells completed drilling operations, and an additional 18 wells will be drilled and completed.