AltaGas says it has entered into a non-binding letter of intent with “a significant Montney producer” to construct a new 120 Mmcf/d deep-cut natural gas processing facility, a 10,000 bbl/d natural gas liquids separation train mix, and rail terminal.

The facilities, which are to be located in another area of the Montney separate from AltaGas' current operations, are expected to have access to the CN rail network allowing for the transportation of propane to the Ridley Island Propane Export Terminal which AltaGas declared a positive final investment decision on earlier this year, the company said in a statement.

The agreement considers joint ownership of the deep-cut processing facility, while the NGL separation train and rail terminal will be fully owned by AltaGas.

The deep-cut processing facility is expected to cost approximately $100 - $110 million while the NGL separation train and rail terminal are expected to cost approximately $60 - $70 million.

AltaGas says it expects to have definitive agreements signed within the first quarter. Subject to regulatory approvals, the facilities are expected to be on-line in early 2019.