In the "Picture Tool Format" area you will locate the "Adjust" tools, located to the far left.

Click on the small arrow to the right of "Recolor".  A drop down box will appear.

Click on the "Set Transparent Color" words or icon.  Once you have clicked on the icon, move it over the area of your image that you want to become transparent.

Click the icon and that area will become transparent.  It should look like the image below.