Western Canada's propane market about to get a little less glutted
Calgary-based AltaGas has given the green light to its Ridley Island Export Terminal, located near Prince Rupert, BC. The brownfield project has an estimated price tag of $450 - $500 million and will be the first propane export terminal on BC's west coast.
The terminal will be designed to ship 1.2 million tonnes/year of propane to Asia, which has en estimated transit time of 10 days. Preliminary engineering and FEED study was completed late last year. Propane will be delivered by rail from various supply locations in BC and Alberta.
The company has already secured long-term contracts with the Prince Rupert Port Authority as well as rail and marine infrastructure on Ridley Island.
The project was approved by the National Energy Board last October with a maximum export capacity of 1.35 million tonnes of propane per year. Construction is slated to begin in early 2017, with an in-service date expected by the first quarter of 2019.
The export terminal should hopefully alleviate some of the oversupply in Western Canada's propane market. Prices collapsed to below zero in the summer of 2015 due to high inventories and lack of export capacity.
Calgary-based Petrogas purchased an LPG export terminal in Ferndale, Washington from Chevron in 2014. The terminal exports up to 30,000 bbl/day (about 1 million tonnes/year) of LPGs produced in Western Canada to markets in Asia. Ferndale is currently the only LPG export terminal on the west coast of North America and is also operated by AltaGas.
LPGs (liquefied petroleum gases) consist of propane, butane and iso-butane, primarily from gas fields, straddle plants and by fractionation. Western Canada produces about 150,000 bbl/day of propane, which was traditionally sold to consumers in Ontario. Propane demand in Western Canada is estimated at only 25,000 bbl/day. Propane production in the US has also risen dramatically since the shale gas boom began in 2009.
The Middle East is currently the world's largest LPG exporter. The US Gulf Coast has been rapidly expanding LPG exports to Asia in the past 5 years, with transit times closer to 25 days. LPGs are used as a petrochemical feedstock but are also increasingly being used to displace kerosene for heating and cooking.
ALTAGAS INVESTOR PRESENTATION - DECEMBER 2016
ALTAGAS RIDLEY ISLAND PROPANE EXPORT TERMINAL
NEB PROPANE MARKET REVIEW: 2016 UPDATE - ENERGY BRIEFING NOTE